Full episode: Market Call Tonight for Wednesday, January 16, 2019
Jaime Carrasco, portfolio manager at Canaccord Genuity
Focus: Precious metals, pipelines, utilities, REITs and dividend-paying stocks
As expected, since my last appearance in October 2018 the markets have begun to exert much greater volatility and downside risk. I continue to advise a defensive asset allocation stance of 30 per cent cash and short-term securities and convertible bonds, 50 per cent in blue chip dividend-paying stocks for income and at least a 20 per cent allocation in the precious sector to hedge overall market trouble. Since my last interview, this strategy has been working and those hedges are finally beginning to pay.
Some of Wall Streets’ smart money is also beginning to recognize the parallels between the global financial and geopolitical environment of the 1930s and today. This is important because that information offers investors a road map on how to manage through what could prove to be a very challenging period. The 1930s were influenced by excess government and corporate debt, divided global governments, populist politics, low global economic growth and massive overall instability. Sound familiar? This period resulted in a complete paradigm shift that established the U.S. and the “good as gold” U.S. dollar as the new global hegemon.
If the 1930s are repeating, investors best prepare for the possible end of the U.S. dollar as the current currency reserve. For investors, this means that once again global debts will be devalued in terms of their purchasing power through a complete reset of the global monetary system. In this environment, the key to financial protection lies in the core message of one of the 1930s’ most memorable movies, The Wizard of OZ, as it defines the No. 1 rule of global power: he who holds the gold makes the rules. I continue to advise that investors consider following the Yellow Brick Road to safety.
Having recognized these factors early on allowed me to lay out a strategy of how to best position ourselves as we transition through this period. The portfolios I managed are designed with these factors in mind and are customized to meet a client’s individual financial needs while at the same time benefiting from challenging times. As I write this, the U.S. Dollar Index is fighting to stay above 95 and gold is once again knocking on US$1,300. I expect that these trends will continue to influence the year ahead as we see greater global political dislocation, slowing economic growth, continued de-dollarization and rising populist revolts.
What I find fascinating is how history is rhyming and by default confirming that I we’re following the right path.
METALLA ROYALTY (MTA.V)
FAIRFAX INDIA (FIH_u.TO)
PAST PICKS: OCT. 30, 2018
AGNICO EAGLE (AEM.TO)
- Then: $46.76
- Now: $52.11
- Return: 11%
- Total return: 12%
- Then: $16.66
- Now: $13.80
- Return: -17%
- Total return: -16%
Total return average: -1%