‘Proceed With Caution’ On Silver, Buy This Asset Instead, Says Investor | Brian Belski

Key Concepts

• Secular Bull Market: A long-term (decades-long) upward trend in the stock market, punctuated by cyclical bull and bear markets.
• Cyclical Bull/Bear Markets: Shorter-term (months to years) upward (bull) or downward (bear) trends within a secular bull market.
• Exogenous Event: An external, unexpected event that significantly impacts the market (e.g., tariffs).
• Momentum Trade: Investing based on the expectation that recent price trends will continue.
• Hutzbah: (Used colloquially) A significant amount of fundamental justification or backing.
• Dual Mandate (Federal Reserve): The Fed’s goal of maintaining both price stability (controlling inflation) and maximum employment.
• Multiple Expansion: An increase in stock prices driven by investors paying a higher price for each dollar of earnings (higher P/E ratio).
• Earnings-Driven Market: A market where stock price increases are primarily driven by growth in company earnings.
• V-Shape Recovery: A rapid recovery in the market following a sharp decline.
• Black Swan Event: An unpredictable event with severe consequences.

Market Outlook & US Equities

Brian Belki, CEO & CIO of Humilus Investment Strategies, maintains a bullish outlook on the US stock market, specifically targeting 7,300-7,500 for the S&P 500. He argues this current bull market, initiated in 2009 (formalized in print in 2010), is a 25-year secular bull market comprised of cyclical fluctuations. He differentiates this from the dot-com bubble of 1999-2000, asserting the current AI-driven tech stock gains are supported by stronger fundamentals ("hutzbah").

Belki acknowledges the inevitability of corrections but views them as temporary pauses within the larger secular trend. He emphasizes that the fundamental construct of the US stock market – valuations, earnings, cash flow, book value, and dividends – remains strong. He believes the market is currently transitioning from being driven by multiple expansion (P/E ratio increases) to being driven by earnings growth. He anticipates a 20%+ gain in equity prices in 2026, contingent on continued earnings growth and a potential drop in inflation.

Contrasting Commodity & Equity Markets

Belki contrasts the equity market’s fundamentals with the recent surge in commodity prices, using silver as an example (a 3x increase in 6 months). While acknowledging price increases are welcome, he cautions against expecting similar returns in commodities over the next 12 months, citing a lack of fundamental support. He points to a 2025 bottom in silver coinciding with a 2024 peak, mirroring a similar pattern in gold, as evidence of a momentum-driven trade rather than fundamental value.

Geopolitical Risk & Investor Behavior

Belki dismisses current geopolitical tensions, specifically referencing annexation concerns, as “overplayed” and largely emotional. He uses the example of Canadian investors selling off assets in response to tariff talks in April 2024, only to miss the subsequent rebound. He argues that the US market historically outperforms during periods of global instability due to its fundamental strength and consistency. He stresses the importance of focusing on company fundamentals and avoiding investment decisions based on political sentiment. He notes that the US is “the best house in a rocky neighborhood.”

Monetary Policy & the Federal Reserve

Belki anticipates continued rate cuts by the Federal Reserve, regardless of who occupies the chair position in 2026. He cites declining inflation and a relatively stable employment rate as key drivers. He downplays the current feud between Trump and Powell, referencing historical precedents (Lyndon B. Johnson and Nixon) where presidents have exerted pressure on the Fed. He highlights the Fed’s dual mandate of price stability and full employment. Prediction markets currently give Kevin Warsh a 44% chance of being nominated as the next Fed chair.

Sector Recommendations

Canada: Humilus Investment Strategies is overweight in Communication Services, Consumer Discretionary, Industrials, and Utilities. They are favoring cyclical sectors like Industrials and Consumer Discretionary, believing the outperformance of Materials and Banks in 2025 will be difficult to replicate. They see Utilities as a play on AI infrastructure.

United States: Overweight in Communication Services, Utilities, and Financials. Belki believes US Financials are undervalued and poised for earnings growth due to deregulation and consolidation opportunities (citing the large number of banks in the US – 600 publicly traded vs. 6 in Canada).

The Bear Thesis & Future Bull Market Phases

Belki identifies the primary errors of the bears in the last two years as misjudging the strength of the AI-driven tech rally and overestimating the impact of geopolitical events like tariffs. He acknowledges that bears will eventually be correct, predicting a “normal recession” (two consecutive quarters of negative GDP growth) at some point, which will mark the end of the current secular bull market. He anticipates this will be followed by a final, significant cyclical bull market before the secular trend concludes.

Historical Bull Market Context

Belki points to historical data showing that the current bull market is still within the average duration of past bull markets. He emphasizes that corrections are inevitable but should be viewed as opportunities within the larger upward trend.

Notable Quotes

• “Have faith in our business fundamentals and the fundamental construct in the United States stock market is such that it's going to drive the V when everybody gets nervous and sells, it's going to drive the bee to come back and that's why US assets outperform.” – Brian Belki
• “The greatest thing about a black swan trade is hey Belowski how come you don't have the black swan strategy the best line you can tell people is because you can never collect on the black swan strategy.” – Brian Belki
• “We’d rather underpromise and overdeliver. Been doing that in our career most uh uh for 36 years now.” – Brian Belki

Data & Statistics

• S&P 500 Target: 7,300-7,500
• Silver Price Increase: 3x in the last 6 months.
• Kevin Warsh Nomination Probability (Prediction Market): 44% chance of being nominated as Fed Chair in 2026.
• Average Bull Market Duration: Current bull market is within the historical average.
• Canadian Investor Performance: Canada has had its best absolute and relative performance relative to the S&P 500 since 1990.

Conclusion

Brian Belki presents a cautiously optimistic outlook for the US stock market, grounded in fundamental analysis and historical trends. He believes the current secular bull market has further to run, driven by earnings growth and supported by the inherent strength of the US economy. While acknowledging the potential for corrections and geopolitical risks, he emphasizes the importance of disciplined investing and focusing on long-term fundamentals. He differentiates the equity market’s strength from the recent momentum-driven surge in commodity prices, advising caution in that sector. His perspective highlights the cyclical nature of markets and the importance of understanding the broader secular trends.