Strategist warns valuations stretched as indices climb

Kyle Taylor, wealth advisor & portfolio manager at TriDelta Private Wealth, joins BNN Bloomberg to discuss strategies for portfolio growth.

Markets have reached record highs, tempting investors to chase recent winners, but stretched valuations are raising questions about future returns.

BNN Bloomberg spoke with Kyle Taylor, wealth advisor and portfolio manager at TriDelta Private Wealth, who discussed the importance of rebalancing, staying diversified and using risk management tools when markets are elevated.

Key Takeaways

• Record highs often create recency bias, tempting investors to chase recent winners.
• U.S. stocks remain expensive and concentrated, limiting forward return potential.
• Rebalancing helps keep portfolios aligned with long-term risk profiles.
• Risk management tools such as cash buffers and option overlays can protect on the downside.
• Stock picks include Coterra Energy for efficiency-driven growth and Dentsply Sirona for dividend value in health care.

Kyle Taylor, wealth advisor and portfolio manager at TriDelta Private Wealth Kyle Taylor, wealth advisor and portfolio manager at TriDelta Private Wealth

Read the full transcript below:

ANDREW: Markets are at record highs, and some investors are wondering whether to take profits. Nobody ever went bust taking a profit, as the saying goes. Let’s get some thoughts on portfolio strategy from Kyle Taylor, wealth advisor and portfolio manager at TriDelta Private Wealth. Great to see you.

KYLE: Thank you.

ANDREW: Are you hearing that from clients, Kyle? Should I liquidate some of my holdings?

KYLE: It has been our approach to take the attitude that rebalancing is an investor’s best friend, especially when markets continue to push new highs. From an index level, we know that forward returns are likely to be more challenging given stretched valuations. The U.S. market is very expensive, and we’ve talked endlessly about how concentrated the S&P 500 and Nasdaq are. Canada has some of the same issues. For us, it’s about how we can differentiate and achieve long-term returns without taking on too much downside risk if there is a pullback, volatility or uncertainty.

ANDREW: Say you had a long-term plan to be 70 per cent in stocks — reasonably aggressive. If it grows to 80 per cent of your portfolio, should you grit your teeth and sell some of that?

KYLE: Sometimes you have to sell great-performing stocks at a time when it feels silly, but keeping your overall risk profile in mind is key. We operate a strategy that is highly differentiated from broader indices and even some of our peers. We don’t brand it as a global equity strategy or global equity fund, but a typical global equity fund has about 60 per cent in U.S. stocks because the U.S. has been the place to be. There’s a degree of comfort there. For us, we are about 20 per cent international and emerging markets today, and underweight the U.S. at about 37 per cent compared with peers.

Canada is an area we’ve been adding to, though we’re more neutral than a few months ago. Our strategy has a five-year annualized return of 17.5 per cent.

ANDREW: I always say, when people talk about their returns, just go to the website.

KYLE: You can learn more at trident.ca. What’s interesting is that we’ve achieved those returns without any exposure to the Magnificent Seven names over the past five years.

ANDREW: None of the Mag 7?

KYLE: Outside this strategy, yes, but not within it. We’ve viewed being uncorrelated with the broader indices as a differentiator. We also use several risk management tools at the portfolio level. For example, within our underweight U.S. position, we use an option overlay that cuts downside risk by half if there’s a pullback in U.S. stocks.

ANDREW: You’ve got some stock ideas for us. This is one I’m not familiar with, Coterra Energy — CTRA in New York?

KYLE: Coterra is a Texas-based oil and gas producer operating solely in the continental U.S. It’s about 60 per cent oil and 40 per cent natural gas. We particularly like natural gas. One reason is that Coterra posted solid Q2 earnings, showing strong operational efficiencies and reduced costs. The company expects to return more than 50 per cent of its free cash flow to shareholders in 2025 through buybacks, dividends and debt repayment. It fits our energy and asset-value screens with a 3.4 per cent dividend yield, trading at eight times forward earnings. We added it to the portfolio last week.

ANDREW: And this was formed by a merger, right? Cabot and Cimarex? So, Marcellus gas and Permian oil. The yield is almost 4 per cent.

KYLE: Correct. We are putting an emphasis on dividend payers and value names today, rather than the growth areas that have been driving returns recently. Another new addition is Dentsply Sirona, ticker XRAY. They design and manufacture professional dental equipment, including implants, aligners and dentures.

The dental market overall has seen softer demand in 2025 due to tariffs and increased competition in aligners after key Invisalign patents expired. Patient volumes remain steady, but bigger-ticket items like implants and dentures are being delayed amid economic uncertainty. The stock yields almost 5 per cent, trades at a 35 per cent discount to its historical valuation and has potential upside from cost reductions and a turnaround in dental products.

ANDREW: Dentists tend to stick with suppliers once they’re comfortable.

KYLE: Yes, much of the professional equipment is standardized, so relationships with suppliers and distributors matter. The real opportunity is in implants, dentures and aligners. Growth there could drive earnings in a meaningful way.

ANDREW: My dentist was telling me he has to turn over $8,000 a day just to keep his practice afloat. It’s a stressful profession. Thanks very much, Kyle.

KYLE: Thank you.

ANDREW: Kyle Taylor, wealth advisor and portfolio manager at TriDelta Private Wealth.

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This BNN Bloomberg summary and transcript of the Sept. 25, 2025 interview with Kyle Taylor are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.

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