Positioning in volatile times

RYAN By Guest Blogger Ryan Lewenza

Is it me or are we in a particularly volatile and uncertain time right now? The headlines are downright scary these days. In no particular order I’m concerned about the impact from Trump’s ongoing trade wars, the newly elected UK PM Boris Johnson and his willingness to leave the EU with no deal, the crumbling Iran nuclear agreement and their recent transgressions (e.g., shooting down a US drone and seizing a British oil tanker), climate change, which is leading to record temperatures across Europe, increased flooding, wildfires and droughts, and the slowing US/global economy, as evidenced by the big drop in government bond yields and currently an inverted yield curve.

It’s no wonder then that we’ve seen an increase in market volatility over the last few years. While 2017 was a dream with very little market volatility, since then we’ve seen some material market declines. As seen below, the S&P 500 has experienced three 10% corrections and one 7% sell-off since the beginning of 2018. So given this environment the two key questions are: 1) is this increase in volatility the precursor to a more significant economic slowdown and market decline; and 2) how should investors be positioning their portfolios?

The S&P 500 Has Experienced Increased Volatility

Source: Stockcharts.com, Turner Investments

First, despite my stated concerns above, I remain fundamentally bullish and see a recession and bear market as remote over the next 9-12 months. This view is predicated on: 1) while the US/global economy is slowing it continues to grow a healthy clip, likely around 2.5% in the US and 3.5% globally for this year; 2) the global central banks are responding to the slowing global economy by cutting interest rates, thus adding stimulus and support to the economy; 3) I am not seeing any significant credit/market excesses like that seen during the tech crash of 2000 and the subprime meltdown of 2007; 4) any resolution to the Trump/China trade war could provide a catalyst to the global economy and equity markets; and 5) technically, the equity markets look great with the US equity markets recently breaking out of their year-and-half long trading range, making new all-time highs. Given this we continue to position portfolios for more upside.

However, risks remain elevated, as noted above, and therefore we continue to reduce risk in client portfolios by switching higher risk positions for lower risk ones. Below is a great visual from Blackrock that essentially captures how we construct and adjust portfolios over time.

Steps to De-Risk Portfolios

Source: Blackrock

Our first line of defense to these risks is our balanced portfolio of 60% in growth equities and 40% in safer fixed income. The bonds help to smooth out portfolio volatility and provide a hedge to our growth equities.

Then, based on our economic and fundamental outlook we adjust our security holdings. When things look great (economy is surging, earnings are rising, central banks are keeping rates low) we favour higher growth investments like US small caps, technology, and high yield bonds. I call this phase 1 of cycle investing.

As the business/market cycle matures and central banks begin to hike rates to help moderate the economy and inflation, we move on to phase 2, which entails de-risking the portfolio by investing in lower risk, lower volatility stocks. This is where we stand today. Specifically, this includes buying ETFs of low volatility stocks and REITS, a focus more on high-quality blue chip companies that pay dividends, investment grade corporate bonds and some government bonds, and a slightly higher cash balance than normal. This is exactly how we’ve been positioning portfolios over the last year or two. For example, we’ve been locking in profits on our small and mid-cap positions and adding to lower risk equities like blue chip dividend and healthcare stocks.

The final phase is phase 3, which entails positioning portfolios for the dreaded recession and bear market. This would include buying more government bonds and increasing cash. During these periods we’re not trying to make clients 6%, we’re trying not to lose them 20%. Fortunately, these dreaded bear markets are short in nature (they last on average 11 months), and are always followed by recovering bull markets.

Now to be clear, in this phase I’m not talking about selling all equities and going to cash since that’s timing the markets, which is very difficult to do consistently. Rather, I’m talking about tweaking the portfolio and taking extra precautions in a very challenging macro environment.

In summary, I view investing in 3 phases and believe we’re currently in phase 2, which entails positioning portfolios for continued growth, but taking smaller ‘bets’ by investing in more defensive investments like low volatility stocks, REITs, healthcare and high-quality bonds.

That’s where we stand today, how about you?

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

79 comments ↓

#1 Shawn on 08.03.19 at 2:10 pm

If we’re in Phase II and the BOC overnight rate is higher than the entire yield curve (ie 10 year is 1.38%) do you think we could see negative rates in Canada beyond Phase III and/or during the next recession?

#2 Flop... on 08.03.19 at 2:21 pm

A while back Garth said he was going to do a “Meaning of life” post.

At first I was interested on what would be his take on things.

Now I have decided that I don’t want to know.

By the time you’ve got everything figured out, its too late.

You’re dead…

M45BC

Apparently you missed it. – Garth

#3 Shawn Allen on 08.03.19 at 2:23 pm

In times Like These:

Is it me or are we in a particularly volatile and uncertain time right now?

*****************************
I can’t remember a time except for the boom in Alberta for some years prior to 2008 when the people around me did not think times were awful.

1950’s Mythical time, before my time, when one job per family sufficed. Low unemployment, low inflation. Mom cooked and cleaned all day but did not “work” lol. Real or mostly imagined this was Camelot. They did not have internet, multiple cars, frequent travel or more than one toilet in the house but they did not miss these things since neither did anyone around them. They were just glad not be sending their young men to war.

1960’s too young to remember but probably people thought things were good.

1970’s High unemployment plus high inflation. Terrible times. Stock markets plunged.

1980’s Still high interest rates and high inflation, unemployment gradually lower

1990’s Some big recessions and governments cutting jobs especially in Alberta.

#4 crowdedelevatorfartz on 08.03.19 at 2:25 pm

At the risk of continuing my #1 Endlessly Blabbermouth Pole position in the Greaterfool Blog-o-sphere…. ( Millenial Be-for-realist… eat yer heart out)

Another excellent topic Ryan.
Concise. Easy to understand. Timely.
One caveat.
You’ve made Apocalypse 2019’s day.

#5 T J Bones on 08.03.19 at 2:28 pm

Mr Ryan:

It sounds scary. Is it time to get the beans and shotgun ready. Just kidding! When will the bargains appear is all I want to know. Thanks for being my Adviser, along with the TEAM.

#6 Flop... on 08.03.19 at 2:37 pm

Original thoughts?

People seem to have trouble deciding what to do with them.

Probably should be treated just like hundred dollar bills.

Keep a few for a rainy day.

And the rest?

If you’ve got them, spend them…

M45BC

#7 mrnick on 08.03.19 at 2:43 pm

Thanks for the useful post.
How would you categorize the preferred shares in this kind of market? Would you allocate less/more or the same?

Thanks so much!

#8 Renter's Revenge! on 08.03.19 at 2:44 pm

Makes perfect sense to me, Ryan.

Would you consider food and water to be defensive sectors, similar to healthcare? E.g. would you buy some COW and CWW to go with your XHC?

#9 Greater fool on 08.03.19 at 2:48 pm

Is a margin loan a valuable tool in a balanced portfolio ?

#10 earthboundmisfit on 08.03.19 at 2:50 pm

Sorry, but that sounds to me like trying to time the market, something we’ve been told for years is akin to catching the falling knife. I’ll pass, thanks.

#11 Brian Ripley on 08.03.19 at 3:00 pm

Real estate, a fundamentally depreciating asset, occupies a lot of anxiety in financial portfolios in Vancouver. My Vancouver housing charts are up on this now:
http://www.chpc.biz/vancouver-housing.html

Res-Listings down 23% from JUN 2012 high
Res-Sales down 51% from MAR 2016 high
Current Monthly Absorption Rate = 18%
Current Months of Inventory = 6

Vancouver SF Detached Price
Down 12.4% from SEP 2017 Peak
Up 99% in last 10 years

Vancouver TownHouse Price
Down 10.4% from JUN 2018 Peak
T-Houses are priced at 54% of SFDs
or 1 SFD = 1.8 Townhouses

Vancouver Condo Price
Down 7.2% from JUN 2018 Peak
Condos are priced at 46% of SFDs
or 1 SFD = 2.2 Condos

By the way, household cash flow is up in 8 of 10 provinces on the latest data points as earnings hits new highs:
http://www.chpc.biz/earnings-employment.html

Average Alberta earnings of $61,492/yr are now at a new high since the last peak in OCT 2014​ and are:

12% above Ontario
15% above the national Canadian average
18% above BC and
24% above Quebec (no typo)

#12 Crowded IHCT Smoking Brooks Vita on 08.03.19 at 3:12 pm

Ryan:: What is your take on low volatility etfs in times like this? Anomaly or good to weather a storm?

#13 expat on 08.03.19 at 3:12 pm

No offense Ryan but when is a financial advisor not Bullish?

In 2008 my top 3 banker never even saw the bomb coming. No one did except a few fringe commentators who guessed right.
We stayed the course and luckily regained a growing stock market.

Here is my point.

Everyone is now bullish always again. Sentiment according to Sentiment Traders as at an all time high….

Complacency is at extremes according to Maclellan’s website. For Tom to say things are looking far too rosy from sentiment’s perspective.

So when everyone is bullish all the time. That to me smells like a short….

I get the “stay the course” talking point bankers and pundits use. It always comes back you say.

Well Europe is now completely negative rates and headed for disaster imho.
Brexit is the smartest thing Britain can do.

They leave and do trade deals with everyone outside the confines of an unelected Brussels who has no answer for their spiral.

Britain economically and politically will regain sovereignty in a time when quick smart decisions will need to be made – FAST!

Draghi has destroyed Europe economically and has no way out of the mess he created.

The Fed had to lower rates due to government and corporate debt. These groups have no way out. They drank the “borrow till you puke Koolaid” pumped by economists and are now trapped.

Negative rates are now seen as the central bank answer to kicking the can a few months down the road?

Alot of noise here but I smell blood when everyone smells roses.

Just saying

#14 Shawn on 08.03.19 at 3:23 pm

Odds of a FED September rate cut ~99%.

#15 Ed on 08.03.19 at 3:30 pm

I haven’t done or will do anything to prepare for our inevitable recession. Will just spend my dividends to live and watch equity prices with a measure of stoicism.

Hopefully I don’t end up cashier at McDonalds in my 8th decade.

#16 Penny Henny on 08.03.19 at 3:41 pm

That’s where we stand today, how about you?-Ryan

//////////////////////////

Did some de-risking back in April (sell in May).
15% came out of VUN, VDU and XIU (US, International, Canada).
10% went to XGD (gold miners) as a defensive move, so far so great.
The other 5% went to my dividend fund (now about 23% of holdings, mostly Canadian banks)

#17 Ryan Lewenza on 08.03.19 at 4:09 pm

Shawn “If we’re in Phase II and the BOC overnight rate is higher than the entire yield curve (ie 10 year is 1.38%) do you think we could see negative rates in Canada beyond Phase III and/or during the next recession?”

They will surely drop but I doubt they would go negative like that seen in Europe. – Ryan L

#18 Another Islamic attack in Toronto thanks to Trudeau! on 08.03.19 at 4:14 pm

DELETED

#19 Ryan Lewenza on 08.03.19 at 4:14 pm

mrnick “How would you categorize the preferred shares in this kind of market? Would you allocate less/more or the same?”

Initially they would sell off as government bond yields decline and credit spreads blow out. But then you’ll see great bargains (yields above 6-7%) and you increase your position. You would trim your government bonds and cash to fund the purchase. – Ryan L

#20 Ryan Lewenza on 08.03.19 at 4:18 pm

Renters Revenge “Makes perfect sense to me, Ryan.

Would you consider food and water to be defensive sectors, similar to healthcare? E.g. would you buy some COW and CWW to go with your XHC?”

Yes those areas do well in a downturn but it’s getting harder to invest in pure play water stocks as they are owned by large industrial companies. – Ryan L

#21 Erick on 08.03.19 at 4:20 pm

There is something I don’t get:
Garth is all about building a portfolio according to principles of diversification and forgetting about it except for rebalancing,
and here you are talking about seriously tweaking the portfolio along time

Ryan is a professional portfolio manager responsible for a big pot of money with the tools, training and time to ensure client assets are safeguarded. This level of care and attention is unlikely to happen with DIY investors who are better off to set and forget. Or get an advisor. – Garth

#22 Yanniel on 08.03.19 at 4:46 pm

Mostly I de-risk based on momentum signals.

#23 Alessio on 08.03.19 at 4:59 pm

If an advisor is getting even a tiny bit cautious then a market crash is around the corner.

Ridiculous. A professional portfolio manager’s job is to constantly assess risk and mitigate it. – Garth

#24 Another Deckchair on 08.03.19 at 5:01 pm

How are we preparing?

1) Still living on one salary, saving the other; (i.e. living WELL beneath our means)

2) Building up cash-equivalents, to ensure we have 1 years’ salary in easy-to-get money; if/when either/both retire;

3) Enjoying every day.

Simple.

#25 Ryan Lewenza on 08.03.19 at 5:12 pm

Erick “There is something I don’t get:
Garth is all about building a portfolio according to principles of diversification and forgetting about it except for rebalancing, and here you are talking about seriously tweaking the portfolio along time.”

Rebalancing portfolios is a big component of how we manage portfolios. And we generally always stick with our 60/40 asset mix. What I’m really taking about is adjusting the holdings based on where we are in the cycle. Sometimes we prefer to invest defensively like now, focusing more on dividend stocks and healthcare and other times we invest a bit more aggressively by investing in things like small cap stocks and high yield bonds. So we’re still investing 60% in equities just tweaking the holdings based our big picture outlook. – Ryan L

#26 Erick on 08.03.19 at 5:30 pm

Thanks Garth and Ryan for the clarification about post 21

#27 Shawn Allen on 08.03.19 at 5:31 pm

Future Returns

So 10 year Canada Bond at 1.4%

Bought for stability and because of lack of other available risk free fixed income at any higher rate.

In theory stock returns have to be higher to compete with bond returns.

How High (i.e low) does the expected equity return need to be to compete with bonds?

Stock prices and P/Es go up precisely because the market required return is lower.

Would people still hold 60% equities if the expected return (before taxes and inflation) was (or is) 5%? They just might.

7% balanced return may be too high to expect now?

If the expected portfolio return is more like 4% people and most certainly institutions still gotta invest…

#28 tccontrarian on 08.03.19 at 5:33 pm

“In summary, I view investing in 3 phases and believe we’re currently in phase 2, which entails positioning portfolios for continued growth, but taking smaller ‘bets’ by investing in more defensive investments like low volatility stocks, REITs, healthcare and high-quality bonds.

That’s where we stand today, how about you?” R.L.

Glad you asked. My wife always reminds me to not offer my opinion(s) unless they’re asked for.

1. As the Markets are forward-looking in general, if there’s trouble up ahead (9-12 months), the time to act is now.

2. I also see investing in 3 Phases:

a) time to be buying (undervalued) assets, if any exist – and they don’t, always.
b) time to hold and/of add on higher-lows, if the trend is likely to continue for some time
c) time to be selling (of assets accumulated in a,b), if trend seems to be ending/topping.

Being successful in the a,b,c phases involves paying attention to reliable indicators and too exercise extreme levels of fading what’s popular (ie. a contrarian bend).

Also, I think increased volatity is here to stay in this era of low growth (real growth, not debt-based growth), as traders buy/sell on short term mo-mo signals.
As I’ve repeatedly stated on previous posts, now is a dangerous time to be long the general markets (although rare opportunities exist in subsectors, still).

My opinions only – not advice! — tcc

#29 Shawn Allen on 08.03.19 at 6:00 pm

The Edmonton Economy

Our two children are both in the process of finding rental apartments downtown Edmonton. One just committed to a studio apartment is a very new building for basically $1200 (less incentives is about $1100). Plus $180 for indoor parking – Edmonton winters!. One Bedroom would be a bit over $1500 for one bed room plus the parking. Very few apartments even available in this building.

Renovated older building in less desirable part of downtown $1200 for one bedroom plus $80 for outdoor parking – brrrr!

A number of new buildings still going up downtown.

My point? What recession? I mean it is slower in Edmonton than it used to be but with around 7% unemployment it is no ghost town. Average unemployment rate in Canada over the last 50 years is around 8% so 7% is simply not bad.

#30 Flop... on 08.03.19 at 6:48 pm

Hey NoName congratulations on making Keith’s top ten.

He is known as Keef in Australia.

I’ve got a challenge for you.

Listen to the full 2 minutes, 30 seconds of this song.

I only lasted 45 seconds.

That’s why they call me Flop…

M45BC

https://m.youtube.com/watch?v=L5inD4XWz4U

#31 AGuyInVancouver on 08.03.19 at 6:52 pm

“.. I am not seeing any significant credit/market excesses like that seen during the tech crash of 2000 and the subprime meltdown of 2007..”

Really?

“…Corporate debt, much of it fueled by high-risk leveraged lending, is at a record high. Risky lending offers higher returns to investors, and can be in greater demand when interest rates are low in the economy.

“The Fed feels the need to come in and save the day like Superman, but all the Fed is going to do is encourage more corporate debt,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “It’s not going to help, and then the Fed will keep cutting.”….
https://www.washingtonpost.com/business/economy/as-it-faces-pressure-from-trump-and-investors-the-fed-prepares-to-take-its-biggest-gamble-in-years/2019/07/28/38edfc52-af22-11e9-a0c9-6d2d7818f3da_story.html?utm_term=.51b5b7372bd6

#32 Flop... on 08.03.19 at 7:24 pm

Hey WULLY, you still lurking in the shadows?

Do remember the fun we used to have talking about sports and other non-topic stuff on Saturday evenings before InfLewenza and Robax came along and spoiled by writing about more financial stuff?

I wrote my first post with my left hand.

I wrote my second with my right.

Throw in a chirp from Garth, and that’s the blog equivalent of a Gordie Howe hatrick…

M45BC

#33 Leo Trollstoy on 08.03.19 at 7:32 pm

Hoarding cash

I deploy during downturns

Otherwise Netflix n chill

https://www.cnn.com/2019/08/03/business/berkshire-hathaway-q2-earnings/index.html

#34 Bruce Allen on 08.03.19 at 8:39 pm

Volatile times? HA! You folks haven’t seen anything yet!!!!

#35 Flop... on 08.03.19 at 8:49 pm

I think I could save more money by moving to Edmonton.

Think of all the money you can save by not buying golf balls for starters.

You can just hit the hail when it comes down in early August…

M45BC

#36 short horses on 08.03.19 at 8:58 pm

Great post, Ryan, and particularly helpful as I’m tweaking my own portfolio in line with your comments.

On the topic of cycles, have you read Howard Marks’ latest book and would you suggest it as a worthwhile investment? I found his first book (The Most Important Thing) helpful with identifying market trends signaling cycle changes and I’m wondering if the new boom adds much more.

#37 acdel on 08.03.19 at 9:18 pm

In my industry; been around for awhile now. What I see are people that can no longer cope with all the pressures being placed on us.

People are being hurt, stressed to the point that there health is failing, relationships are being destroyed, moral has never been lower. People turning on each other; yeah I get it has happened in the past but this time it is different. People are desperate and the outcome cannot be good.

The one’s that get it; take a deep breath, realize what is most important in your live (health, family) and screw the rest!

#38 crossbordershopper on 08.03.19 at 9:34 pm

canada and us rates will go to below 1 on the 10 year, where england is now. it wont go negative, but like .6 or so, with switzerland, with all there currency backed 25% by gold will be at 1.5 negative, from current .88,
high yield emerging debt like india, turkey, mexico will come down to 4 to 5.
low yields are here forever, and they cant push them up, money is sadly worth little in this slow growth world thats why growth software stocks trade at 20 x sales. and such.
on another note i wanted to discuss us pref for us residents compared to canadians the yields are better like 6, and taxes are lower, or zero based on overall income.
canadian oil stocks will be at record lows in october timeframe, but when your down 90 percent on so many names in the sector what does a bounce mean anyway. the number of individual canadians who own oil and gas stocks are lots especially out west. all totally underwater. sure diversify and some did, but many didnt. a lot less brokers in calgary then ever before , no investment capital being raised in canada for any ste uock while us market has regular ipo , big and small, mergers etc, canada is wasteland of busted up pot stocks as we are seeing now, you will see 90 percent of all pot stocks gone by 2024. when the us fed legalize it, the us guys know how to run business i find canadian managers in all forms, politicians, investors, managers etc, generally not as good. and its reflective in their performance in their sector.

#39 Long-Time Lurker on 08.03.19 at 9:36 pm

No changes to my asset allocations. Positive yield, YTD. I don’t want to say too much: This is Garth’s turf.

So, the 2020 Mars rover is going to Jezero Crater on Mars. NASA is looking for life on Mars.

If you look at the photo of the Jerzero Crater (in the link below), you can easily see a deep river bed winding it’s way into a larger body of water and creating an alluvial fan or delta. So if there was this much water on Mars at one time, Mars would have been rather Earth-like, wouldn’t you think?

Jezero Crater or Bust! NASA Picks Landing Site for Mars 2020 Rover

By Mike Wall November 19, 2018 Search For Life

We now know where NASA’s life-hunting, sample-caching Mars rover will touch down a few years from now.

The car-size Mars 2020 rover will explore the 28-mile-wide (45 kilometers) Jezero Crater, which hosted a deep lake in the ancient past, NASA officials announced today (Nov. 19). If current schedules hold, the six-wheeled robot will launch on July 17, 2020, and touch down on Feb. 18, 2021.

“The landing site in Jezero Crater offers geologically rich terrain, with landforms reaching as far back as 3.6 billion years old, that could potentially answer important questions in planetary evolution and astrobiology,” Thomas Zurbuchen, associate administrator for NASA’s Science Mission Directorate, said in a statement today.

“Getting samples from this unique area will revolutionize how we think about Mars and its ability to harbor life,” he added….

https://www.space.com/42486-mars-2020-rover-jezero-crater-landing-site.html

#40 AACI Homedog on 08.03.19 at 9:38 pm

Thanks Ryan…that post is very informative !

#41 Shawn Allen on 08.03.19 at 9:49 pm

Debt at Record High!

“…Corporate debt, much of it fueled by high-risk leveraged lending, is at a record high. Risky lending offers higher returns to investors, and can be in greater demand when interest rates are low in the economy.

*************************************
The population and the economy and everything keep growing. Meanwhile with inflation the value of money must slowly erode and prices rise.

So, the natural state of stock markets and debt and consumption and wealth per capita, and home prices etc. is at “record high”.

Not a sufficient reason to worry.

#42 TRUMP2020 on 08.03.19 at 9:57 pm

30% Company Stock (Integrated oil&gas)
30% International Index Fund
30% Canadian Money market Index fund
5% US S&P Index Fund (Sold down to 5% last month)
5% CAD TSX Index Fund (Sold down to 5% last month)

#43 NoName on 08.03.19 at 10:39 pm

@ Flop

I dint know is that good or bad thing to be on any list, especialy from that dude, once i aksd him is al or ai he never replayed…

I you were on a list i would be last one, kind of like fat tail on N, Nasim’s charts.

That song was easy, try this one.
https://www.youtube.com/watch?v=jtgA0jvhp2A

#44 eesh on 08.03.19 at 10:51 pm

another day, another gun massacre in the good ole USA.
sigh.

#45 Bruce Allen on 08.03.19 at 10:59 pm

#37; acdel

I have said the same thing. The tipping point is near as I witness things around me collapsing at an alarming rate: marriages falling apart, the amount of people I personally know who are under severe emotional and financial stress, the amount of individuals around me taking everything from blood pressure medication to antidepressants and tranquilizers, the income inequality, the rising desperation I see in the faces of those around me, the worsening opioid crisis, poverty, homelessness, the housing crisis, etc. Heck, my local newspaper featured a story several months ago which stated that food bank use is at record levels. They’ve never seen anything like this. Now, there’s a new client passing through the doors: seniors. Yep, even seniors have now been coming into the food bank asking for a little bit of help. Everything keeps going up and up in price, while debt is at record levels.

This is NOT a sustainable path folks. Society is collapsing. Everywhere I look today I see nothing but moral decay along with a population that is becoming increasingly ANGRY and frustrated. And the reason why we’re in this predicament in the bloody first place is because we’re living in a system that was never designed for the human spirit. The next downturn is going to be severe, and I fear a lot of people are going to pushed over the edge. It’s sheer madness and utter lunacy to me that we even allowed ourselves, as a species and a society, to even reach this level of decadence.

I fear for any kid being born into this world today…

#46 NJGeezer on 08.03.19 at 11:16 pm

#29 Shawn Allen,

If the kids were thinking economically, they would be sharing a 2 BR.

#47 Jay Currie on 08.04.19 at 12:01 am

While I am not convinced things are quite a bleak as Ryan paints them, I can’t help but notice that Garth’s favorite shiny metal and its volatile stepsister silver are showing signs of life.

Many of you may remember what happened to precious metals after the 2008 financial meltdown…To the moon as the Howe Street boys (long extinct) would have said. If all of Ryan’s gloom and doom happens, (and I am a bit sceptical as he managed to go data free with “climate change, which is leading to record temperatures across Europe, increased flooding, wildfires and droughts” which not even the IPCC accepts – that’s weather whatever Climate Barbie says), there is every chance that gold will glint again. Plenty of beaten up gold and silver juniors with entry points in the pennies let you ride the PM tiger.

#48 Ponzius Pilatus on 08.04.19 at 12:41 am

#2 Flop… on 08.03.19 at 2:21 pm
A while back Garth said he was going to do a “Meaning of life” post.

At first I was interested on what would be his take on things.

Now I have decided that I don’t want to know.

By the time you’ve got everything figured out, its too late.

You’re dead…

M45BC

Apparently you missed it. – Garth
————
The meaning of life ala Garth is simple:
Own a dog.
Have a 60:40 balanced portfolio.
Don’t own Real Estate.
There’s no yellow peril.

#49 Al on 08.04.19 at 12:41 am

I don’t always market time, but when I do, I “tweak”.

-XX

#50 Tony on 08.04.19 at 2:10 am

Re: #7 mrnick on 08.03.19 at 2:43 pm

Trump’s tariffs on China this August the 1st will collapse interest rates in America shorter term. I guess Trump didn’t like the Fed only cutting one-quarter of one percent.

#51 Bdwy on 08.04.19 at 2:37 am

16% costco
40% sp500
20% Nasdaq qqq
20% xaw. All world ex maple

Buy and held untill last sept. Went all cash.

Jan 09 reentered all positions.(dumped cpd and zre then for 0 prefs and damn its niiiice)

sold all again(back at 2800 on sp)and waiting to renter .(bring on the blood!!!)
Sure, sold too early . 12 mo return about 25% still.

That was before getting the crazy idea to buy some miners(Abx,KL,Yamana,pretium) from some nutter goldbugs right here on greater fool about a month ago(thx btw)
Went in with 20% of portfolio , sold out thursday on trump bump. 8% gain booked. Over one month while I wait for the next big sale on the sp500.
I’ll likely never buy gold again.

Bumps up 12 month return to almost 27%.
Maybe just luck but I’m going to keep playing.

Rules.
1. Buy in, be in , stay in, the market. Long term. Default position is in. Natural position is in.
2. Step off the tracks briefly when the train is coming

#52 Bdwy on 08.04.19 at 3:00 am

Past 12 months the sp500 has gone from 2840 to 2885. Sub 2percent.

#53 Trumpocalypse2019 on 08.04.19 at 7:57 am

Bruce Allen – #45 nailed it:

#37; acdel

I have said the same thing. The tipping point is near as I witness things around me collapsing at an alarming rate: marriages falling apart, the amount of people I personally know who are under severe emotional and financial stress, the amount of individuals around me taking everything from blood pressure medication to antidepressants and tranquilizers, the income inequality, the rising desperation I see in the faces of those around me, the worsening opioid crisis, poverty, homelessness, the housing crisis, etc. Heck, my local newspaper featured a story several months ago which stated that food bank use is at record levels. They’ve never seen anything like this. Now, there’s a new client passing through the doors: seniors. Yep, even seniors have now been coming into the food bank asking for a little bit of help. Everything keeps going up and up in price, while debt is at record levels.

This is NOT a sustainable path folks. Society is collapsing. Everywhere I look today I see nothing but moral decay along with a population that is becoming increasingly ANGRY and frustrated. And the reason why we’re in this predicament in the bloody first place is because we’re living in a system that was never designed for the human spirit. The next downturn is going to be severe, and I fear a lot of people are going to pushed over the edge. It’s sheer madness and utter lunacy to me that we even allowed ourselves, as a species and a society, to even reach this level of decadence.

I fear for any kid being born into this world today…

*******

Two mass shootings in the USA in barely 12 hours. More are probably coming. As Trump prepares for war with China, Iran, NK and Russia, the society at home is unravelling and the climate disaster is upon us already this summer.

Pure chaos from inside out is coming.

Spend your long weekend wisely.

PREPARE.

#54 MF on 08.04.19 at 9:07 am

#45 Bruce Allen on 08.03.19

What a joke comment. Everywhere I look I see the opposite.

Statistically the world is actually better for humanity.

Don’t surround yourself with drug taking failures if that’s what you need to do.

MF

#55 dharma bum on 08.04.19 at 9:30 am

#15 Ed

Hopefully I don’t end up a cashier at McDonalds in my 8th decade.
——————————————————————–
That could be a good thing:

https://www.youtube.com/watch?v=TJh5wdvdfVE

#56 dharma bum on 08.04.19 at 9:36 am

#45 Bruce Allen

This is NOT a sustainable path folks. Society is collapsing.
——————————————————————–

Same as it ever was……

https://www.ted.com/talks/jared_diamond_on_why_societies_collapse/transcript?language=en

#57 Alberta Ed on 08.04.19 at 9:40 am

I wouldn’t take the MSM’s apocalyptic climate predictions seriously. Most of them are based on dubious computer models that may relate to Planet Zorg, where Sock Boy lives (across the street from Climate Barbie), but not Planet Earth where the rest of us reside.

#58 Andrew on 08.04.19 at 10:03 am

Remember when bonds were safe lol

Nothing has changed. Held to maturity you always get your money back. – Garth

#59 AB Boxster on 08.04.19 at 10:57 am

The four phases you described seem to make sense or perhaps made more sense at one time when economies and financial markets had not been manipulated and almost crushed by government policy, financial services industries fraudulent practices, and central bankers.

Economies have not had a true recessionary period for many years now, but it can be argued that much of the world has been in a recession of sorts since 2009. Maybe not with periods of negative growth, but certainly with periods of very low or almost no growth.

The American economy and equities markets have boomed over the past few years, mostly due to Trump and his policies. But the rest of the world has really not. They would not be in a positive growth mode at all without massive intervention over the past 10 years.

Can economies and financial systems be considered healthy when Quantitative Easing is now an official central bank policy, without which, economies would collapse? Are economies sound, when ZIRP is required to spur investment, yet which leads to massive government and personal debt.

How is it normal, that negative interest rate are an actual thing?

How can the Canadian economy be healthy, when Canada’s central bank cannot raise interest rates in this country, because there are now so many people with such massive amounts of debt, that raising interest rates a 1/2 point would likely bankrupt 50% of the population?

I don’t disagree that one needs some sort of approach to take to try to address the cyclical nature of economies, markets and risk.

But I wonder if the models presented are not too simplistic, and really impossible to respond to now. There are simply too many variables involved now to predict. Too many disruptors to take into account.

Phase II talks about raising interest rate to moderate the economy and inflation.
Sound economic theory, right?

Well tell me of one economy in the world, over the last 10 years of QE and ZIRP, and massive printing of fiat currency, that has experienced inflation?

Even after 10 years of massive govt intervention, the biggest fear today is deflation.

Name one economy, other than maybe the US, that has required higher interest rate to cool down a booming economy?

Nope, interest rate management, today, has nothing to do with inflation policy or economic growth.
It is now just a means to try to not kill the 10 year boom in the US markets, and not bankrupt half the nation that has been on a spending spree for the past 10 years.

Hardly normal.
Hardly predictable
Throwing the concept of sound economic theory on the trash pile.

And with ‘Modern Monetary Policy’ all the rage (you know the bizarre theory from the globalist socialist lefties) , and Facebook looking to be the world’s next central banker (well everyone in the world excluding those of us not woke enough to love Facebook) with “LIBRA, what could possible go wrong?

Buy land and gold. Lots and lots of land and gold.

#60 MF on 08.04.19 at 11:04 am

#51 Bdwy on 08.04.19 at 2:37 am

“Rules.
1. Buy in, be in , stay in, the market. Long term. Default position is in. Natural position is in.
2. Step off the tracks briefly when the train is coming”

-Lol i’m sure garth likes reading this type of comment. Totally ignoring everything this blog drones on about every single day. Comes to post for some weird ego boost.

Timing the market? Sure my crystal ball tells me when the “train is coming”. Going all cash with tax implications of selling..what are those? Individual stocks (and miners to boot)? Yee haw cowboy!

MF

#61 Ryan Lewenza on 08.04.19 at 11:05 am

short horses “Great post, Ryan, and particularly helpful as I’m tweaking my own portfolio in line with your comments. On the topic of cycles, have you read Howard Marks’ latest book and would you suggest it as a worthwhile investment? I found his first book (The Most Important Thing) helpful with identifying market trends signaling cycle changes and I’m wondering if the new boom adds much more.”

I haven’t read his new book but anything he writes is worthy of reading. He’s brilliant and really understands the credit markets and how they perform over the business/market cycle. – Ryan L

#62 oh bouy on 08.04.19 at 11:11 am

@#48 Ponzius Pilatus on 08.04.19 at 12:41 am
#2 Flop… on 08.03.19 at 2:21 pm
A while back Garth said he was going to do a “Meaning of life” post.

At first I was interested on what would be his take on things.

Now I have decided that I don’t want to know.

By the time you’ve got everything figured out, its too late.

You’re dead…

M45BC

Apparently you missed it. – Garth
————
The meaning of life ala Garth is simple:
Own a dog.
Have a 60:40 balanced portfolio.
Don’t own Real Estate.
There’s no yellow peril.

________________________

If you’ve been reading this blog for awhile you’d know ‘don’t own real estate’ isn’t part of Garth’s doctrine.

#63 oh bouy on 08.04.19 at 11:15 am

@#45 Bruce Allen on 08.03.19 at 10:59 pm
_____________________________

gotta disagree here.
lifes not always sunshine and rainbows but its never been better for most people than it is right now.
So many opportunities out there.

may I suggest surrounding yourself with more positive people.

#64 Lizard Man on 08.04.19 at 11:22 am

DELETED

#65 Paul on 08.04.19 at 11:26 am

56 dharma bum on 08.04.19 at 9:36 am
#45 Bruce Allen

This is NOT a sustainable path folks. Society is collapsing.
——————————————————————–

Same as it ever was……

https://www.ted.com/talks/jared_diamond_on_why_societies_collapse/transcript?language=en
———————————————————————————————
This should cheer you up!

https://www.youtube.com/watch?v=5IsSpAOD6K8

#66 Damifino on 08.04.19 at 11:30 am

#45 Bruce Allen

I fear for any kid being born into this world today…

I was born in 1950. There wasn’t much fear taken out on my behalf, as I recall.

Kids my age were still getting polio because Salk vaccine was suspect and not yet in widespread use. The Asian Flu pandemic of 1957 was ugly. Most of us got it. A lot of grandparents died.

Cars were “coffins on wheels” with zero safety features. Even seat belts were decades away. No one seemed concerned. Adults and children alike went through windshields. The prevailing wisdom was that you were better off being “tossed clear” of a road accident. (Then, as now, a lot of folks were none too bright).

In school we played with asbestos. I mix up a ball of it with glue and baked it in an oven. It made a dandy little puppet head. We were proud of asbestos. It was an important Canadian export.

Kids were strapped regularly in school for minor infractions and then disciplined a second time at home. That was business as usual. No child’s advocacy groups cried for justice.

My father was in the Normandy invasion. He suffered horrifying PTSD after the war. The veteran’s department told him and his comrades to suck it up and get on with life. (He took his own in the eighties). A least he wasn’t one those poor boys we left buried in Europe.

#67 Ponzius Pilatus on 08.04.19 at 11:37 am

#59
good comment.
I think part of the puzzle is the huge underground economy, which is not reported by official government reports.
Countries like Italy which according to official accounts should have been bankrupt a long time ago, keeps on chugging along because of its large under the table economy.
Also, there is hawala. Read the following:
https://www.richmond-news.com/ancient-underground-money-network-flourishes-despite-more-bank-regulation-1.23905631

#68 Shawn Allen on 08.04.19 at 11:42 am

#66 Damifino on 08.04.19 at 11:30 am

Excellent comment. It seems like no one under about age 50 has a clue how much the safety and quality of life in Canada has improved since the 1960’s.

As I posted a while back, whining is the new Black.

#69 Ponzius Pilatus on 08.04.19 at 11:45 am

#66
Being a teenager in the 60s was the best.
Beatles, Woodstock, long hair and bell bottom pants.
We were alive, questioned everything.
Would not trade for the way teenagers live these days.

#70 jess on 08.04.19 at 11:52 am

“there is good people on both sides ! Obviously not rapid enough for some!

Trump: “The FBI, local and state law enforcement are working together in El Paso and in Dayton, Ohio. Information is rapidly being accumulated in Dayton. Much has already be learned in El Paso. Law enforcement was very rapid in both instances. Updates will be given throughout the day!”

——————–

After all, What’s in a name?
a pardon for a guy banned for life ?…becomes rather meaningless phrase

https://qz.com/75322/manufacturer-of-the-gun-used-in-newtown-may-stay-in-the-cerberus-family-after-all/

https://www.nytimes.com/interactive/2019/05/01/magazine/remington-guns-jobs-huntsville.html
https://www.wsj.com/articles/a-clash-of-cultures-at-alabama-factory-1456655407

US taxpayers gave the Chinese $20 million, free land to build the plant, tax breaks and an additional unspecified amount of money for “worker training” this is regarded as “Chinese investment”

positioning :

https://subsidytracker.goodjobsfirst.org/prog.php?statesum=AL

tax-incentive packages
“Cutting taxes and simplifying regulations makes America the place to invest! Great news as Toyota and Mazda announce they are bringing 4,000 JOBS and investing $1.6 BILLION in Alabama, helping to further grow our economy!

#71 Shawn Allen on 08.04.19 at 11:54 am

Economic Advice for the Young

#46 NJGeezer on 08.03.19 at 11:16 pm
#29 Shawn Allen,

If the kids were thinking economically, they would be sharing a 2 BR.

********************************
Absolutely, but young people also need to get out and live independently especially if that is what they want. (And the “get out” part is the most crucial, it’s part of growing up.) Somehow, someway, in the midst of all the doom these two can each afford their own places.

Would not be the case in Toronto or Vancouver though.

#72 Shawn Allen on 08.04.19 at 11:59 am

Damfino….

In my youth I recall asbestos insulation on hot water pipes, nicely out in the open in basements.

We played with a big hunk of lead at times.

Managed to survive it all. Now people freak when toxins are at the parts per billion level…

#73 oh bouy on 08.04.19 at 12:04 pm

@#66 Damifino on 08.04.19 at 11:30 am
#45 Bruce Allen

I fear for any kid being born into this world today…

I was born in 1950. There wasn’t much fear taken out on my behalf, as I recall.

Kids my age were still getting polio because Salk vaccine was suspect and not yet in widespread use. The Asian Flu pandemic of 1957 was ugly. Most of us got it. A lot of grandparents died.

Cars were “coffins on wheels” with zero safety features. Even seat belts were decades away. No one seemed concerned. Adults and children alike went through windshields. The prevailing wisdom was that you were better off being “tossed clear” of a road accident. (Then, as now, a lot of folks were none too bright).

In school we played with asbestos. I mix up a ball of it with glue and baked it in an oven. It made a dandy little puppet head. We were proud of asbestos. It was an important Canadian export.

Kids were strapped regularly in school for minor infractions and then disciplined a second time at home. That was business as usual. No child’s advocacy groups cried for justice.

My father was in the Normandy invasion. He suffered horrifying PTSD after the war. The veteran’s department told him and his comrades to suck it up and get on with life. (He took his own in the eighties). A least he wasn’t one those poor boys we left buried in Europe.
_________________________________

bravo. a voice of reason.

#74 jess on 08.04.19 at 12:06 pm

are these allowed in canada?

CFD industry is not highly regulated, the broker’s credibility is based on its reputation and financial viability. As a result, CFDs are not available in the United States.

https://www.investopedia.com/terms/c/contractfordifferences.asp

#75 Irwin on 08.04.19 at 12:08 pm

“That’s where we stand today, how about you?”

I stand amazed in the presence …..

#76 Bdwy on 08.04.19 at 12:20 pm

MF (little pissy today?)
“Timing the market? Sure my crystal ball tells me when the “train is coming”
……..
No need for a crystal ball.
You were told in advance of all moves right here.
Sorry about your poor returns.
Pay better attention.
All gains tax free.

#77 Bdwy on 08.04.19 at 12:38 pm

Just for cranky MF here is the quote from 5 weeks ago, June 23 to be exact.

“for the first time ever I am seeing a big move starting in the barbarous relic…
Equities otherwise to fade.
10yr stays within a hair of 2% to 2020.

Buy gold asap, but keep the sell button ready.

Good luck guys and gals.”

Seems pretty easy to me!
But Wrong on 10y. Obviously has further to fall.

#78 jess on 08.04.19 at 1:47 pm

#73 oh bouy on 08.04.19 at 12:04 pm

a voice of reason? “suck it up”….eh ? the science and evidence relating to asbestos are facts

so what was unknown to you then is the known today would you let your kids play as you did?

#79 Bruce Allen on 08.04.19 at 2:25 pm

#53, thank-you.

The amount of “Mary Sunshines” who still don’t get it frankly astounds me, and it’s yet another example of why we’re circling the drain (check out George Carlin’s video on YouTube where he sums up the current sad states of affairs). Carlin NAILS IT.

I spent 33+ year as an educator. No comparing the generation today. Apples to oranges. This current crop of youth is one of the most uncouth and out-of-control I ever had the misfortune of teaching. I noticed a fundamental change in the student body when prayers were taken out of the classroom and leftist ideology took over the curriculum. The garbage they’re spoon these kids it’s a wonder of of them can function in today’s world. They no longer do any thinking, allowing their devices and gadgets to do all the thinking for them. Towards the end of my teaching career, I simply stopped caring, as did many of my fellow colleagues and faculty, some of whom suffered nervous breakdowns and had to take extended leaves as per their doctor’s advice…

Guys like Oh Buoy and MF who can’t see the train wreck coming will be the ones (along with 90% of the rest of the population) will be the ones standing there absolutely sh!tfaced when it all hits the fan. I am well prepared and have a contingency plan in place. It’s also why I’m glad I moved the hell out of the big city. You guys should also follow Karl Denninger’s blog over at market-ticker.org. Lots of good information posted over there from a guy who knows his stuff and calls it as he sees it.

Keep on the hitting the bong though. It dulls reality.