Why this money manager is buying CN Rail and Charles Schwab

15.2% total return over the past 12 months (net of fees) with three-year annualized 16% and five-year annualized 10.4% as of Feb. 28. Her model portfolio is ~66% equities and ~34% alternatives, with top equity sector weights ~15% energy, ~12% U.S. technology and ~10% U.S./Canadian financials; recent buys include Canadian National (~$145), Charles Schwab (~US$96) and Agnico Eagle (~$165), and she sold Walmart (bought ~US$42, sold ~US$95). She cautions that the Middle East conflict and higher oil could drive near-term volatility, but slower interest-rate rises versus 2022 may limit market impact; recommends diversified portfolios.

Analysis

The current oil-led risk-off impulse is acting like a volatility amplifier rather than a straight re-run of 2022 because policy rates aren’t moving up in lockstep; this makes profit opportunities in commodity-linked equities more asymmetric (large upside upside capture with limited policy-driven topping risk) while compressing the inflation-to-rate feedback loop that forced broad de-ratings in 2022. Expect a two-speed market: commodity producers, midstream and transport names tied to bulk commodity flows will re-rate faster (days–weeks) as cash flow revisions are front-loaded, while consumer-facing and rate-sensitive financials will show a slower, multi-month digestion as earnings and spending channels work through.

At the security level, the cheapest high-quality franchise in transportation carries optionality beyond simple freight volumes — network density and pricing passthrough create sustained margin capture when commodity volumes rise, which is why relative-value between the two rails matters more than absolute rail exposure. For gold producers, operating leverage is non-linear: every $100/oz move in gold typically converts into an outsized FCF swing for large producers due to low marginal costs and hedging exhaustion; that makes multi-year call exposure to a senior miner more attractive than equivalent bullion exposure if you expect a persistent risk-premium on safe-haven assets. Wealth-management platforms benefit from structural RIA flows but retain sensitivity to short-term rate direction; slower Fed tightening reduces immediate NIM tailwinds but extends duration of asset-gathering runway.

Key catalysts to watch: Middle East escalation or a quick ceasefire (days–8 weeks), monthly CPI/PPI prints and US retail sales (1–3 months), and quarterly production/inventory reports for oil/gold (monthly–quarterly). Tail risks include a sudden global growth shock that collapses commodity prices (reverses trades fast) or an unexpected hawkish Fed that reintroduces broad market de-rating. Position sizing should be asymmetric: lean into idiosyncratic, cash-flow-engineered names while keeping macro hedges small and liquid.

Key Decisions for Investors

• Pair trade (relative-value): Long CNI / Short CP, 1:1 notional, horizon 6–12 months. Entry on any <5% spread widening from current levels; target 15–25% relative outperformance. Risk control: hard stop if relative adverse move >10% or network-disruptive regulatory news; size to 2–4% of equity risk budget.
• Convex gold exposure: Buy AEM Jan-2027 LEAP calls (or 12–18 month call structure) sized 2–3% of equity risk budget to capture persistent safe-haven premium. Reward if gold sustains >$2,200/oz: 40–60%+ upside; risk = premium paid. Exit/roll if gold < $1,850 for >30 days or AEM outperforms peers by >50% intraperiod.
• Selective Schwab long: Buy SCHW with a 6–12 month horizon to capture RIA/retail flow multiple expansion. Add on 5–10% pullbacks; target 20–30% upside. Hedge macro beta by trimming on a 12% adverse move or pairing vs large-bank basket (e.g., short XLF tranche) to isolate flow vs NIM risk.
• Tactical portfolio hedge: Buy GLD (or spot gold) and/or 1–3 month put spreads on consumer discretionary ETF (XLY) sized to 1–2% portfolio cost to protect against a sharp consumer-driven equities drawdown. Trigger: sudden Brent > $100 and two-week risk-off; payoff: protects 10–20% downside in cyclical equities at modest premium.