Market Call: Barry Schwartz's outlook on North American Large Cap Stocks (June 9, 2026)

Key Concepts

• AI Infrastructure/Hype: The speculative bubble surrounding AI-related stocks, particularly chip manufacturers.
• High-Quality Business Investing: A strategy focusing on companies with predictable earnings, strong balance sheets, and dominant market positions rather than speculative growth.
• Proprietary Data: The competitive advantage held by companies that own unique, non-replicable data sets, which are essential for AI development.
• Alternative Asset Management: Investment in non-traditional assets (infrastructure, private credit) as a hedge against market volatility.
• Total Return: The combined return from capital appreciation and dividends, emphasized as the primary metric for long-term success.

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Market Outlook and Strategy

Barry Schwartz, President and CEO of Baskin Wealth Management, addresses the current market volatility, specifically the rotation out of high-flying chip stocks. He characterizes the recent surge in AI-related names as "FOMO" (Fear Of Missing Out) and "gambling" rather than sound investing.

• The AI Bubble: Schwartz notes that while AI infrastructure spending is projected to reach $1 trillion by 2027, the market is currently overpaying for future perfection. He compares the current environment to the 1999-2000 fiber-optic bubble, noting that while the technology is transformative, many speculative companies will fail.
• Investment Philosophy: He advocates for "inverting" the problem: instead of betting on speculative AI startups, investors should focus on "picks and shovels" companies—established, profitable businesses that provide the infrastructure for the future.

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Analysis of Specific Sectors and Companies

Financials and Asset Management

• Brookfield Corporation: Viewed as a superior way to gain exposure to alternative assets compared to investing in their individual funds. Schwartz highlights their ability to pivot into "hot" themes (infrastructure, carbon, AI) while maintaining a disciplined, safe approach.
• Canadian Banks (National Bank & Royal Bank): Schwartz argues that banks are currently worth higher valuations than in the past due to their transformation into fee-based, recurring revenue models. He notes that they have successfully navigated interest rate hikes and housing market fears.

Technology and Software

• Microsoft: Considered a "hyperscaler" that will benefit long-term from AI. Schwartz views the current valuation (approx. 20-22x earnings) as attractive for a company with double-digit growth.
• Constellation Software: Highlighted as an "insanely cheap" software play. Unlike many peers, it does not dilute shareholders with excessive stock-based compensation and aggressively acquires software companies during market downturns.
• Adobe: Schwartz expresses caution, noting that while it is a high-quality company, it faces increased competition from Canva, Figma, and AI-native tools, leading his firm to sell their position earlier this year.

Commodities and Industrials

• Canadian Natural Resources (CNQ): Preferred for its high-quality management, massive reserves, and ability to grow production and dividends. Schwartz emphasizes that he invests in the management team, not just the commodity price.
• Precious Metals (Wheaton Precious Metals/Franco-Nevada): Schwartz avoids these due to the unpredictability of commodity prices, noting that gold prices have remained stagnant despite geopolitical conflicts.
• TFI International: A long-term holding that has benefited from a strong economy and favorable U.S. regulatory changes for trucking.

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Notable Quotes

• "If you want to participate in this FOMO, you have to obviously accept that it's going to be volatile... That's not investing, that's gambling."
• "The companies that have built the railroads are going to benefit for years and years and years. It's kind of like the gold mine... the guys who did and found the gold mines made a fortune for years."
• "The most important thing in the age of AI is owning the proprietary data, having data that no AI can get access to."

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Top Picks Summary

1. Meta Platforms: Favored for its extreme profitability and the fact that it uses its compute power for its own internal growth rather than reselling it. Schwartz notes it is trading at less than 20x earnings.
2. National Bank: Chosen for its strong wealth management focus and successful expansion into Western Canada via the Canadian Western Bank acquisition.
3. Constellation Software: Selected for its disciplined capital allocation and ability to grow earnings at double-digit rates by acquiring niche software businesses.

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Synthesis

The core takeaway from the discussion is a call for patience and discipline. Schwartz emphasizes that in a market driven by hype, the most reliable path to wealth is owning high-quality, cash-flow-positive businesses that possess proprietary data or essential infrastructure. He advises investors to ignore short-term volatility and focus on companies that can deliver consistent, double-digit earnings growth over a 5-to-10-year horizon, rather than chasing speculative, high-valuation "AI plays."