Ask The Experts - March/April 2026

Answers are provided by 5i Research.ca

Q:  Hi Peter. I'm curious if you recall your days at Sprott and before, specifically late 1999 and then 2007-2008. Did you get a feeling that the markets were overvalued (or had gone up too much too fast)? Did you make any defensive moves by taking profits, going to more conservative holdings, using options to protect downside, etc.? To me it looks like the conditions are ripe for similar declines.

A: We (Peter) in no way see current conditions as the same as 1998/2000 dotcom. At that time, there was not really a 'spending' frenzy on capital growth, it was simply a massive valuation shift as investors saw the internet as the next greatest thing. Hundreds of companies doubled in value, without an additional dollar being spent (except perhaps on press releases). Gold company executives started tech companies with no tech experience. Anything remotely tech went up. 

Today, yes, there is strong momentum in many sectors. But there are also trillions of dollars being spent on real products and real initiatives to drive costs lower. Some companies have clear competitive advantages, through sheer customer size and with hundreds of billions in cash flow at their disposal. 

In 1999, simply adding '.com' to your corporate name did nothing for your company, really, but it could double or triple your stock. We went to some meetings where we would ask ourselves, ‘who would give these guys money?', and then they would raise $100 million the next week. 

Now, yes, the internet did result in some cost savings for lots of companies, over time. We think the AI margin benefits may be much faster. We do believe every company in the world will need to utilize AI, or be left behind. This is far different than every company in the world simply launching a website for on-line sales (which is what a lot of the dot-com frenzy was, in fact).

2007 was a bit different. There was massive confidence, and massive leverage, and massive speculation (and fraud) in certain areas (housing). But many Canadian mining companies got absorbed (Inco, Falconbridge, Dofasco etc.) at huge valuations using high priced debt. It was a debt-fueled party. It collapsed on confidence, mostly, as investors and banks suddenly pulled credit. It was swift. Essentially the punch bowl at the party (debt) was pulled away. But there were big economic differences as well. Rates were higher than today. Valuations were higher (varied, of course). Job losses were present and then accelerated. House prices rose everyday (the opposite is mostly true now). Passive investing was not as big, so managers needed to be very active and many panicked. Selling fed more selling. It was ugly. Banks failed. Today most are very strong (there are also new regulations). The Bank of England was three hours away from shutting down, essentially, at one point. 

In terms of the 'world ending' this was by far the closest we have seen, at least in my career (I was not around in 1929!). But I was a broker in 1987 during the Market Crash, and that was nothing compared to 2008. I had a tough time in 2008. My 2007 fund performance was very, very good (best focused small cap fund that year) and Sprott was growing like gangbusters. Sprott went public in May 2008. So, I had a 'hot' fund with money pouring in, at pretty much the worst time for money to be coming in. This hot money went cold in the decline, so redemptions made it difficult to have much protection. In a mutual fund, redemptions are daily and need to be funded. In a declining market, it can be a horrible situation for a manager. I am not making excuses. I was still the manager. But it can be tricky to see $50 million come into a fund in May and then see $150 million go out in July. 

For the first part of the decline, I was not particularly cautious, as I had no real estate exposure or exposure to many problem areas. But a liquidity crisis affects all sectors. And, as a small cap manager, things moved faster than large caps, both ways. 

Today, despite 'pockets' of stupidity (crypto treasury companies, meme stocks, micro caps, 3X leveraged ETFs) I think the market is actually far more disciplined. There are better regulations, rates are going down, investors have been fully trained to buy the dips and there is $7 trillion in cash on the sidelines. Investors seem concerned, and in 2007, at least for the first nine months, investors appeared to have no care in the world and would simply borrow money and go shopping.

We see right now a big concern on an AI-bubble, debt and other 'issues' that are seen as popular things to worry about. But the fact that they are actually already worries gives us some confidence in that there is not a giant crisis looming around the corner. Do we think the market could correct 10%? Sure. Anytime. But we do not see a 1987, 2000 or 2008 scenario ahead.

Q:  Hi, I'm reading that heavy truck sales have dropped significantly year over year - about the same as they did during Covid. I've understood this is a recession signal of sorts, because it acts as confirmation that buying of goods has slowed enough to be affecting shipping. Is this a reasonable assumption? If so, I would welcome any comments and thoughts you might offer. If not, please feel free to correct any misunderstanding I have regarding this. Much appreciated!

A: Heavy truck sales are often viewed as a leading indicator for recessions due to their sensitivity to economic activity in manufacturing, construction, and freight transport. Declines typically precede downturns by 6-12 months as businesses cut back on capital spending.

Since the late 1970s, sharp drops in U.S. heavy truck sales (Class 8 trucks over 14,000 pounds GVW) have aligned with nearly every recession, including the early 1980s, dot-com bust, and 2008 financial crisis. For instance, sales fell over 67% from 2006 peak to 2009 trough during the Great Recession. As of late 2025 into early 2026, U.S. heavy truck sales have plunged 47% over recent three-month periods, hitting four-year lows and raising recession flags for mid-2026. Year-over-year declines reached 15-21% by August 2025.

While reliable historically, it's not foolproof—recent data shows occasional false signals, like in 2016, and factors like supply chain issues or tech shifts can distort readings. Recent rebounds post-pandemic also highlight nuance. It is one leading indicator, but many other indicators are not predicting a recession.

Q: Your thoughts on this tech sell off? Things are getting ugly for Software, especially. What could turn this market around? Are we getting close to capitulation, in your opinion?

A:   We are likely getting close to capitulation levels in software names, with fear and other emotions running high, but what follows is typically one of the following two scenarios: a) a V-shaped recovery, or b) a slow grind back up as many investors seek investments outside of the software space, but fundamentals and outlook begin to improve.

The selloff has been dramatic, but we would not quite call it a 'waterfall type decline', which usually precede V-shaped recoveries. This looks more like we could eventually see a bounce or grind higher once a bottom has been found. What typically happens at capitulatory bottoms is that sellers get exhausted, the headlines and news continues to be highly bearish but yet price stops going down, and in fact sometimes price goes up on bad news, which confuses some investors as recency bias starts to take hold. 

We think any sort of recovery will take months (possibly a year or more) and investors will need to be patient and disciplined in holding onto select beaten up names.