From Whisky to Wall Street: Lorne Steinberg’s Strategy for 2025

Lorne Steinberg’s market insights on navigating volatility, investing in quality stocks, and positioning portfolios for long-term growth.

Editorial Team (ET)May 7, 2025

Market turbulence is nothing new, but as global uncertainties persist, the focus on high-quality, fundamentally strong companies remains the most effective strategy for investors. Lorne Steinberg, president of Lorne Steinberg Wealth Management, shares his insights on the market outlook and his top picks that stand out in today’s evolving financial landscape.

Recent market conditions have been defined by heightened volatility, economic policy shifts, and geopolitical tensions. While these elements continue to shape the investment climate, Steinberg emphasizes that rational decision-making and long-term strategic planning will ultimately drive economic growth. Despite political rhetoric and short-term disruptions, policymakers understand that stability and investor confidence are crucial to sustained economic expansion.

Government stimulus, a primary catalyst for growth over the past decade, is becoming less viable due to rising debt levels and the normalization of interest rates. Consequently, private sector investments are expected to play a larger role in driving economic progress. In this environment, high-quality companies with solid balance sheets and reliable cash flow become even more attractive to investors.

American Express: A Market Leader in the Credit Industry

American Express has long been synonymous with premium financial services. Despite the competitive nature of the credit card industry, the company has consistently demonstrated its ability to generate strong earnings and substantial free cash flow. Over the past several years, American Express has maintained double-digit earnings growth and has proven to be an astute allocator of capital.

A significant factor in its financial strength is its disciplined approach to shareholder value. The company has steadily increased dividends while reducing its share count by nearly 40% over the past two decades. Recent concerns over a potential slowdown in consumer spending have pressured the stock, but its resilience during past financial crises suggests it remains a strong long-term investment.

Bank of Nova Scotia: A Turnaround Story in the Making

The Bank of Nova Scotia, historically one of Canada’s underperforming financial institutions, is undergoing a notable transformation. A shift in leadership in 2023 has resulted in a renewed strategic focus, with a clear emphasis on improving profitability and operational efficiency.

One of the key moves in this restructuring has been the bank’s decision to reduce its exposure to Latin America. Exiting markets such as Colombia, Costa Rica, and Panama allows the institution to reallocate capital to more lucrative opportunities. While the bank's performance metrics still lag behind its Canadian peers, the stock trades at a compelling discount and offers a promising dividend yield of six percent. As the bank continues to execute its turnaround plan, investors stand to benefit from both improved earnings growth and a potential narrowing of its valuation gap.

Diageo: A Global Spirits Giant at an Attractive Valuation

Diageo, the world’s largest spirits producer, has built an empire with globally recognized brands such as Smirnoff, Johnnie Walker, and Guinness. Despite its strong market position, the company has faced headwinds in recent years, with post-pandemic revenues stagnating and investor confidence wavering.

The stock is now trading at a 10-year low, presenting a compelling opportunity for long-term investors. Diageo continues to generate substantial free cash flow, which it strategically reinvests through acquisitions, share buybacks, and dividends. If management takes decisive action to restore investor confidence, the company has the potential to rebound significantly. With a current dividend yield of 3.8 percent, Diageo remains a world-class business available at a favorable valuation.

Looking Ahead: Why Quality Matters More Than Ever

In an uncertain economic environment, Steinberg’s investment philosophy aligns with Warren Buffett’s timeless wisdom: “It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Each of his top picks—American Express, Bank of Nova Scotia, and Diageo—demonstrates the characteristics of resilient businesses with strong market positions, reliable cash flow, and long-term growth potential.

As markets continue to fluctuate, investors should resist short-term distractions and focus on high-quality assets. The key to success in the years ahead will be selecting companies with strong fundamentals that can weather volatility and emerge stronger on the other side.

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