David Driscoll, president and CEO of Liberty International Investment Management Inc.

Focus: Global equities
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MARKET OUTLOOK

Nothing has changed since my last appearance. From both a fundamental and technical aspect, the market appears at a top. As a result, Liberty is not in the market to buy anything. With any new cash from clients, we’re starting with only half positions and waiting to see what the market bears in the coming months before adding to those positions. There’s nothing wrong with buying gradually. More importantly, it’s a good time for investors to understand the recipe to make money in the long run. Here are eight steps to a winning recipe:

  1. Low fees: The lower the fees, the more you make.
  2. Low turnover: By investing in businesses and not trading stock prices, transaction costs stay low and you keep more of your capital for growth.
  3. Invest in companies that consistently grow their free-cash flows: These companies have the financial flexibility to raise dividends, invest in innovation and make strategic acquisitions.
  4. Diversify globally: Long-term returns outside North America have historically been one per cent to two per cent higher.
  5. Re-balance the portfolio when necessary: Having a high concentration in one stock can lead to trouble if that company’s stock price crashes to Earth (i.e. Valeant).
  6. Avoid correlated assets: In 2008, all the Canadian banks fell 40 per cent, not just one of them. Pick one Canadian bank and move on.
  7. Manage your cash prudently: Given that the market has risen for eight years, it’s prudent to hold some cash to take advantage of opportunities if the market corrects.
  8. Choose stocks with above-average annual dividend growth: The average growth rate of stocks globally is about seven per cent. Those that grow their dividends faster provide investors with greater income to use in retirement. Their share prices also tend to grow at a faster rate.

TOP PICKS

David Driscoll's Top Picks

David Driscoll, president and CEO of Liberty International Investment Management Inc., shares his top picks: Coloplast, Stryker, OpenText.

COLOPLAST A/S (CLPBY.PK) – 509.50 DKK
Coloplast makes products for ostomies, incontinence, mastectomies, wound healing and skin care. An aging demographic has greater needs for colostomy bags and catheters and Coloplast is one of the leading providers of this equipment. The stock has fallen 15 per cent from its peak on the back of weaker wound and skin care products, but still has organic revenues growing six per cent to seven per cent annually, thanks to higher demand in China.

STRYKER CORP. (SYK.N) – US$144.50
Stryker primarily makes hip- and knee-replacement products but also biologics and digital imaging systems throughout the world. They currently have a leg up on innovation with new robotic endoscopy systems for knee surgeries and replacements. And they use 3D printers to produce artificial hips that are aligned precisely for each patient with material that helps promote bone growth within the device, resulting in a faster and less painful recovery.

OPENTEXT CORP. (OTEX.O) – $40.10
OpenText is the leader in enterprise information management. Their products enable businesses to grow faster, reduce operational costs and reduce information governance and security risks by improving business insight, impact and process speed.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
CLPBY Y Y
SYK Y Y Y
OTEX Y Y Y


PAST PICKS: NOVEMBER 14, 2016

David Driscoll's Past Picks

David Driscoll, president and CEO of Liberty International Investment Management Inc., reviews his past picks: Stantec, Thermo Fisher Scientific and Halma.

STANTEC INC. (STN.TO)

  • Then: $34.34
  • Now: $33.38
  • Return: -2.79%
  • Total return: -1.75%

THERMO FISHER SCIENTIFIC (TMO.N)

  • Then: $148.02
  • Now: $174.01
  • Return: 17.55%
  • Total return: 17.89%

HALMA PLC (HLMAF.PK)

  • Then: £986.00
  • Now: £1,090.26
  • Return: 10.57%
  • Total return: 12.07%

TOTAL RETURN AVERAGE: 9.40%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
STN Y Y Y
TMO Y Y Y
HLMAF Y Y Y


WEBSITE: libertyiim.com