The Market Maze: Driscoll’s Compass Points to Cash Flow

A global investment strategy rooted in fundamentals: Why David Driscoll is betting on Toromont, Unilever, and Microsoft amid rising rates and volatile markets.

Editorial Team (ET)June 5, 2025

When the markets start showing signs of divergence, seasoned investors look for structure, not speculation. That’s exactly the tone David Driscoll struck in his latest appearance, where the president and CEO of Liberty International Investment Management laid out his updated market view—and three well-considered stock picks to navigate the current climate. With a global lens and a clear focus on portfolio discipline, Driscoll’s strategy reflects a sharp reading of the macroeconomic terrain and an unflinching belief in long-term fundamentals.

While North American indices have limped into mid-year with mixed results, international markets are quietly outperforming. As of last Friday, European equities had advanced 8.1 percent, while emerging markets were up 7.6 percent. Canada’s S&P/TSX Composite Index rose a respectable 5.8 percent. In stark contrast, U.S. small caps dropped 7.3 percent, Japan retreated 4.8 percent, and the Nasdaq slipped 1 percent. The so-called Magnificent Seven tech stocks remained 4.2 percent in the red. These discrepancies aren’t random—they’re structural.

Currency Strength and Rising Rates Create Winners and Losers

Driscoll points to valuations as the critical variable. Europe and emerging markets entered the year cheaper, while the U.S. dollar’s recent decline has buoyed local currencies. The euro, which hovered around parity with the greenback last August, now trades at $1.14. That strength in foreign currencies has diverted capital flows into safer havens like the euro, Swiss franc, and yen, reinforcing a shift away from U.S. equities, particularly risk-heavy segments like small caps and tech.

And then there’s the issue of interest rates. Tariffs and inflation fears have kept U.S. rates elevated, which Driscoll describes as “kryptonite” for small-cap and growth stocks. The higher the cost of capital, the harder it becomes to justify lofty valuations or aggressive expansion plans. For investors, this means one thing: structure matters more than ever.

Pragmatism Over Emotion: A Structured Portfolio Approach

Driscoll's investing philosophy is pragmatic. He emphasizes having a well-balanced portfolio, avoiding overcrowding in any single sector. In a typical 30-stock setup, each holding starts with an average weight of 3.3 percent. If a stock in a sector like healthcare or small caps drops to 2.5 percent, Driscoll sees it as an opportunity—not a setback. That’s where dollar-cost averaging comes into play. By topping up underperformers back to neutral weight, the portfolio stays diversified and responsive without becoming emotionally reactive. “Swim against the tide,” he advises. It’s this discipline that separates investors from speculators.

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