David Dietze, founder, president and chief investment strategist at Point View Wealth Management

Focus: U.S. equities
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MARKET OUTLOOK
We are cautious on the markets right now, although we are long-term bulls.

We are cautious about stocks right now. How can you not be, with the market up 10 per cent in the last seven weeks, in the second longest bull market in history, with valuations significantly above average?

There are headwinds aplenty. Higher interest rates are never a positive. They raise borrowing costs for cars, homes and capital expenditures, and make fixed income relatively more attractive.

Those higher rates attract more money to the U.S. That drives up the value of our currency, reducing the value of overseas sales and making our exports less attractively priced.

Sentiment, while not bubbly, has become more enthusiastic, which from a contrarian’s point of view is a negative.

Some are more bullish now, enthusiastic over plans for tax cuts, fiscal stimulus and less regulation. But, with the recent run-up, the upside if that comes to pass may be less than the downside if it takes longer than expected, deficit or inflation hawks impede, or international events take precedence.

Interest rates are so low, it’s hard to get too enthusiastic over fixed income, but we believe it necessary as a hedge on volatile markets and deflation. It will dampen any drawdowns in your account, so you are more apt to stay the course.

TOP PICKS

TEVA PHARMACEUTICALS (TEVA.N)
Teva’s the world’s largest generic drug company. We think generics will play a large role in making new compounds available to the masses and reining in spiraling health-care costs. Its nearly one-fifth market share of the generic market is poised to grow following the acquisition of a large generic portfolio from Allergan. Teva’s manufacturing prowess, legal resources and marketing expertise are unmatched. Teva’s stock is a relative bargain, trading at just half its price of 18 months ago, less than seven times earnings, and with a near four per cent dividend. Most recent purchase at $34.

EXXON MOBIL (XOM.N)
This is the highest-quality energy company out there. Its operations are diversified both globally and across all aspects of energy production, including exploration, transportation, refining and marketing. The stock is 15 per cent below its all-time high and boasts an above average 3.3 per cent dividend. That payout’s grown nearly 10 per cent annually for the last decade.

UNILEVER (UL.N)
Based in London and the Netherlands, Unilever is a powerhouse in personal products (57 per cent) and packaged foods (43 per cent), marketing such brands as Knorr soups, Hellmann’s mayonnaise and Lipton teas. Investment now is timely as the stock is nearly 20 per cent off its high. Its generous 3.5 per cent dividend has grown 12.5 per cent annually over the last ten years.