Gavin Graham is president of Graham Investment Strategy, Ltd. His talk was called. "After Eurogeddon - The New World of Investing".
First he said that we should not be in long term government debt. It is the worst thing currently and you will not make any money. Global Industrial production is down. The Purchasing Managers Index (PMI) is under 50 again. Commodities are rising. China's leaders are changing. Chinese leaders stay in power by raising the GDP by over 8% per year.
Shanghai's market is the worst performing and it is down. TSX is up, but it is the next worse performing market. When governments print money it goes into assets, like housing and commodities. The decline in GDP was 27% in 1922. In 2007, the decline in GDP was 4.1%. Spanish 10 year bond yields are down, with bonds generally selling at 103. Germany's bond rates are going up. They are at 1.66% and rising. German banks hold enough Spanish bonds to wipe out shareholders' value.
Greece's default was the first in the developed world in 60 years. Bondholders got 31.5% of the face and a lower coupon. You cannot say Greece will not default, it already has. Do not buy long term government bonds. America and Europe are no longer driving the bus. Growth will come from Asia and India. Emerging markets were hit by 2007 and growth is slowing down. Inflation is not a worry as it is getting lower at present.
China has 57 cities with over 1M people. They will have 220 such cities by 2020 and 379 in 20 years.
The 5 year return on the S&P is up and the TSX is down. Other stock markets are also down. Germany's market over the past year is up the most. For the TSX, the commodities were the worst performers over the past year. The CDN$ is flirting with parity to the US$. The CDN$ dropped against the US$ in the 2007 recession. Gold and silver stocks are cheap even though gold and silver are up.
The general population is US is growing at 1% and in Canada at 0.6%. The 65+ and 85+ population is growing faster than the general population. The best income will come from dividends, but you can also get some income from corporate bonds.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.