Bullish on the S&P and the U.S. Economy | Brian Belski and Jimmy Connor

Key Concepts

• Humilis Investment Strategies: A firm founded by Brian Belski, focusing on "investing with conviction and humility."
• Secular Bull Market: A long-term market trend (projected by Belski to last 25 years from 2009) characterized by sustained growth despite periodic corrections.
• Earnings-Driven vs. Momentum-Driven Markets: A transition where market returns are fueled by fundamental earnings growth rather than valuation expansion or speculative momentum.
• Contrarian Investing: The practice of investing against prevailing market sentiment, often identifying value in neglected or "broken" sectors.
• Private Credit/Equity Risks: Concerns regarding liquidity and valuation transparency in alternative investments, particularly following interest rate shifts.
• Thematic Investing: Focusing on long-term structural trends (e.g., cybersecurity, streaming consolidation, financial services) rather than short-term noise.

Firm Overview and Philosophy

Brian Belski, formerly of Merrill Lynch and BMO, launched Humilis Investment Strategies in October 2025. The firm operates as a model delivery provider, offering separately managed accounts, three ETFs, and two mutual fund series. Their investment philosophy is rooted in:

• Low turnover and high-quality equities: A fundamental, bottom-up approach.
• Humility: Acknowledging that market conditions change and that investors should never assume they are the "smartest person in the room."
• Conviction: Maintaining a disciplined process regardless of market noise.

Market Outlook: The "Wall of Worry"

Belski maintains a positive outlook for the S&P 500, with a year-end target range of 7,300 to 7,500.

• Earnings Transition: He argues the market is shifting from multiple-driven (momentum) to earnings-driven. Historically, earnings-driven markets see lower annual returns but are more sustainable, albeit with higher volatility and frequent corrections.
• Resiliency: Despite geopolitical tensions and concerns over AI valuations, Belski believes the secular bull market has 8–10 years of runway remaining.

Alternative Investments and Private Credit

Belski expresses caution regarding private equity and private credit, citing a lack of liquidity and transparency.

• The "08/09" Parallel: He compares the current hype around private credit to the hedge fund craze of 2008, warning that when liquidity dries up, investors will face significant "humility."
• Institutional Visibility: He praised the Ontario Teachers' Pension Plan for being transparent about their write-downs, suggesting this is a necessary "washing out" of the system.

Sector Analysis and Stock Picks

• Financials: Belski is bullish on US financials, specifically large-cap banks with scale and small-cap banks with strong balance sheets. He believes the sector was "unjustly hurt" by over-regulation and negative sentiment.
• Technology/AI: He advises against owning the entire sector. He favors Microsoft (cash reserves/monetization), Oracle (strong balance sheet), Palantir (visionary leadership), and Palo Alto Networks (cybersecurity).
• Streaming/Media: He views Netflix as the "Kleenex of streaming" and highlights Spotify as a high-quality consumer staple. He predicts further consolidation in the streaming space.
• Healthcare: He is skeptical of weight-loss drugs (GLP-1s) due to long-term uncertainty, preferring biotech firms like Gilead that focus on curative research.

Canadian Market Perspective

Belski notes that the TSX had a strong 2025, but warns that resources and gold may underperform in the near term due to mean reversion (gold is currently four standard deviations above its long-term average).

• Preferred Canadian Names: Aritzia (strong management/expansion), Waste Connections (US-focused growth), Alimentation Couche-Tard (strong consumer staple operator), and RBC/National Bank (financials).
• Energy: He prefers Canadian energy companies (e.g., Enbridge, TransCanada, Suncor) over US counterparts, noting they are less cyclical and more consistent in dividend delivery.

Synthesis and Conclusion

The core takeaway from Belski is that investors should focus on fundamental quality and long-term themes rather than chasing momentum or succumbing to the "noise" of the financial press. By maintaining a contrarian mindset—buying when others are fearful and avoiding over-hyped, illiquid assets—investors can navigate the current choppy market environment. Belski emphasizes that the US and Canadian economies remain resilient, and the best strategy is to own companies with strong balance sheets and clear paths to earnings growth.