Market Call: Gordon Reid's outlook on U.S. Equities

Market Call with Morella Fernandez Gordon-Reed – January 9, 2026 – Summary

Key Concepts:

• Political Noise vs. Investment Strategy: Separating short-term political events from long-term fundamental analysis.
• Gold as a Risk Asset: Understanding gold’s role as a portfolio hedge during market uncertainty, but recognizing its historical underperformance compared to equities.
• Tariffs as Negotiating Tactics: Viewing trade tariffs as temporary disruptions rather than long-term economic shifts.
• AI Disruption in Software: Assessing the potential impact of Artificial Intelligence on established software companies.
• Mag Seven Performance: Analyzing the relative performance of the “Magnificent Seven” tech stocks.
• Fundamental Analysis: Focusing on company performance, valuation, and long-term growth potential.
• Diversification: Spreading investments across different sectors and asset classes.
• Patience in Investing: Holding onto quality investments through market fluctuations.
• Valuation Metrics: Utilizing price-to-earnings ratios and return on equity to assess investment opportunities.

---

1. Navigating Political Uncertainty & Market Fundamentals

Morella Fernandez Gordon-Reed emphasizes the importance of insulating investment strategies from short-term political noise, citing examples like recent concerns regarding Fed independence and statements made by Mr. Trump. She argues that markets tend to “see through” political events, as evidenced by the limited reaction in bond and currency markets. Her core advice is to prioritize bottom-up analysis focusing on company fundamentals rather than reacting to daily headlines.

2. Gold’s Role and Historical Perspective

The discussion turns to gold’s recent surge, acknowledging its function as a risk asset during uncertain times. However, Gordon-Reed cautions against overenthusiasm, pointing out that gold has historically underperformed equities. She illustrates this with a comparison: while gold has increased roughly 4.5x since reaching $1,000, the Dow Jones Industrial Average has risen almost 50x over the same period. This highlights the importance of understanding historical context and avoiding chasing short-term trends.

3. Canada-China Trade Relations & Tariff Impact

Regarding the Prime Minister’s trip to China to address tariffs, Gordon-Reed notes this is primarily a Canadian issue. Goodreid Investment Counsel’s Canadian manager, Donnie Moss, is monitoring the situation. The firm adjusts portfolios to account for tariff impacts on affected industries, focusing on pricing and valuation. She characterizes tariffs as disruptive but temporary “negotiating tactics.”

4. Opentext & AI Disruption in the Software Sector

Responding to an email question about Opentext’s poor performance, Gordon-Reed identifies the broader concern of AI potentially displacing established software companies like Oracle, Salesforce, and Adobe. Opentext is undergoing reorganization, attempting to shed 15-20% of its revenue to become more AI-centric. The success of this transition is uncertain, reflected in the stock price. She suggests investors consider more established players like Salesforce, while expressing caution about Oracle’s debt load and Adobe’s potentially vulnerable “moat.”

5. The “Magnificent Seven” & Amazon’s Performance

Analysis of the “Magnificent Seven” tech stocks reveals that only Google and Nvidia outperformed the S&P 500 in the past year. Amazon underperformed, achieving a modest 5.2% return. Despite this, Goodreid remains an owner of Amazon, emphasizing the importance of patience. Amazon’s strength lies in its three core businesses: e-commerce (41% market share), AWS cloud (30% market share, exceeding Microsoft Azure and Google Cloud), and its emerging AI capabilities. The stock’s relative stagnation presents a potential opportunity as it becomes “cheaper” fundamentally. Gordon-Reed doesn’t advocate for “legging in” but prefers taking a “fairly meaningful stake” if they like a position.

6. Elephant Insurance & Industry Challenges

Responding to a caller’s question about Elephant Insurance, Gordon-Reed acknowledges the challenges facing the health insurance industry, particularly fluctuating medical cost ratios impacted by COVID-related disruptions. She notes the timing of government funding and the “lumpy” nature of results. However, she believes Elephant is less exposed than some competitors due to its risk-sharing policies with employers. She recommends holding the stock, anticipating a premium increase in 2026.

7. JP Morgan & the Banking Sector Outlook

Gordon-Reed expresses a positive outlook on the banking sector, particularly JP Morgan, despite a slightly light investment banking report. JP Morgan’s strong position as a premium bank justifies its valuation. She highlights the potential for increased profitability driven by a favorable macroeconomic environment and anticipates a strong pipeline of deals.

8. Pfizer & the Pharmaceutical Industry

Gordon-Reed advises against investing in Pfizer at the current time, citing a weak pipeline and limited potential for significant revenue growth. She recommends considering alternatives like Merck, which has a stronger pipeline and is actively developing new compounds to offset patent expirations. Amgen is also highlighted as a promising biopharmaceutical option.

9. Eaton Corp & the Data Center Expansion

Regarding Eaton Corp, Gordon-Reed acknowledges its strong performance driven by the demand for electrical infrastructure related to data center development. While the stock has become expensive, she suggests it could be a worthwhile investment, particularly for long-term investors. She cautions that potential overspending on data centers could create short-term volatility.

10. Uber & the Future of Transportation

Gordon-Reed views Uber as a promising long-term investment, emphasizing its massive reach (1 in 2 people globally use its products). She believes Uber is well-positioned to capitalize on the future of transportation, including self-driving technology. She highlights the potential for significant cost savings and increased accessibility with driverless vehicles.

11. Top Picks – January 9, 2026 (Performance Review)

• Goldman Sachs (X): Significant gains (176.1% upside, 64% total return) driven by a strong investment banking environment.
• Merck (MRK): Moderate gains (8% upside, 11% total return) with potential for future growth driven by its pipeline and strategic acquisitions.
• PulteGroup (PHM): Strong gains (20% upside, 21% total return) benefiting from the undersupply of homes in the US.

12. New Top Picks (January 9, 2026)

• Meta (META): Attractive valuation, massive user base (1 in 2 people globally), and potential for growth in the AI space.
• Morgan Stanley (MS): Strong wealth management business, solid financial metrics (17% ROE, 23% ROTCE), and a favorable macroeconomic environment.
• RTX (RTX): Diversified aerospace and defense company benefiting from both commercial aerospace demand and increased geopolitical spending.

Synthesis/Conclusion:

Gordon-Reed’s overall message emphasizes a disciplined, fundamental-driven investment approach. She advocates for ignoring short-term political noise, focusing on company performance, and maintaining a long-term perspective. Her top picks reflect a preference for established companies with strong market positions, solid financial metrics, and exposure to growth trends like AI and infrastructure development. Patience and a willingness to hold quality investments through market fluctuations are key themes throughout the discussion.