Berman's Call for Monday, April 20, 2026

Key Concepts

• Tactical vs. Long-term Investing: Distinguishing between reacting to short-term market dislocations (geopolitics) and maintaining a long-term portfolio strategy.
• Earnings-Driven Markets: The belief that corporate earnings and global economic growth are the primary drivers of market performance.
• Risk-On Environment: A market state characterized by high investor confidence, evidenced by record highs in the S&P 500 and sustained momentum in the Nasdaq.
• Covered Call ETFs: A strategy used to generate income by selling call options against a portfolio of stocks, often used for tax-efficient cash flow.
• Futures Curves: A technical tool used to analyze market expectations for commodity prices (specifically oil) over a long-term horizon.
• Value Trap: A stock that appears cheap based on valuation metrics but remains stagnant or declines due to fundamental business issues.

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1. Market Outlook and Geopolitics

Larry Berman emphasizes that while geopolitical events (such as tensions involving Iran) cause market "dislocation," they are secondary to earnings momentum and global economic growth for long-term investors.

• Current Sentiment: The market is in a "risk-on" phase, supported by the S&P 500 hitting all-time highs and the Nasdaq’s recent 13-day winning streak.
• Earnings Season: The focus is shifting to the "meat" of earnings season, where 50% of S&P 500 companies will report. Key metrics to watch include AI-related capital expenditure (CAPEX), inflation, and cost pressures.
• Mag Seven Stocks: While these stocks have driven recent growth, many are now "fully priced." Berman suggests they may trade sideways for 1–2 years as the market waits for earnings to catch up to valuations.

2. Stock and ETF Analysis

Berman provided specific insights on several assets:

• Petrobras: Recommended trimming positions. For those seeking high USD dividends, he suggests ZPAY (a Canadian-listed ETF with US dollar units) as a more diversified, lower-risk alternative.
• PayPal & Block: PayPal is characterized as a "value trap" with limited upside (target $60–$70). He prefers the IGV (Software as a Service) ETF for exposure to the software sector rather than individual payment processors.
• Canadian Banks (ZEB): While he views the equal-weight Canadian bank index as a strong long-term hold, he advises against adding new capital at current levels, suggesting investors wait for market corrections.
• Nike (NKE): Currently viewed as a "trade" rather than a long-term investment. With a forward P/E of 30, the stock faces headwinds in China and is expected to struggle until valuations normalize.
• Celestica: Cautioned against this as a long-term investment due to its recent triple-digit growth, labeling it a play for "momentum traders" rather than value investors.

3. Educational Segment: Oil and Gas Strategy

Berman analyzed whether investors should be long-term bulls or tactical traders in the energy sector using a Futures Curve analysis.

• The Methodology: By comparing current futures prices (white line) against historical curves (red/purple/blue lines), he illustrates market expectations.
• Key Finding: Long-term oil prices are not significantly elevated despite current geopolitical noise. The market expects increased supply over the next five years (e.g., from Venezuela).
• Actionable Insight: Monitor the price of December oil futures. If it breaks below $70, the current supply-demand tension is likely resolved; if it breaks above $80, it signals potential long-term inflation, which would negatively impact equities.

4. Notable Quotes

• "For the average investor that sits at home and looks at their statements once a month, you shouldn't be overly worried about [geopolitics]. You should have portfolios set to deliver the expectations that you're looking for... for the next 5 or 10 years, not the next 5 or 10 hours."
• "Buying Canadian banks on corrections and pullbacks is the way to play it for most Canadians."
• "[Nike] is a name we added recently to our portfolio around $45... for us it's a bit of a trade. We're long for a trade but we're not long for an investment."

5. Synthesis and Conclusion

The overarching theme of the discussion is the importance of discipline and diversification. Berman advocates for moving away from single-stock reliance (like Petrobras or Nike) toward diversified ETFs that offer tax-efficient income (like covered call strategies). He stresses that while short-term market noise—whether from war or sector-specific hype—can be distracting, investors should remain anchored to fundamental earnings growth and valuation metrics. The "risk-on" environment is currently supported by strong momentum, but investors should be cautious of overpaying for growth stories that have already reached peak valuations.