Lorne Steinberg spoke in the opening remarks. His talk was called “The State of the Union: The Challenges That Investors Face in Today’s Market”. He is the CEO of Steinberg Wealth Management. His company’s site is here.
Lorne Steinberg says he has spent 30 years in the investment business and it is never boring. You need to reflect on the big picture. Their firm calls this the “State of the Union”. Political dysfunction has increased.
We have high debt. This is for government, corporations, and Individuals. This can be a big risk when interest rates go up.
We have slowing growth. However, we have also had the longest growth on record without a recession. He does not know when we will have a recession. China’s growth is lower than 6%. They need 6% growth for stability.
Another risk is interest rates. We had 5% mortgage rates 30 years ago, then they went higher. Now we have the lowest and even negative rates. One Bank has offered negative interest rate mortgages. We do not know the implications of negative interest rates. If inflation comes back, we could be in trouble.
Shiller says it is better to look at 10 year P/E. We look at 20 years. Volatility equal opportunity. Volatility is your friend. It results in opportunities for courageous investors. In the past the yields on stocks were lower than bond yields. With lower stock yields, we hoped for dividend increases. Now stock yields are higher than bond yields.
The Lesson is to focus on value. Buy low or hold cash and wait. Being fully invested in the market has not been a sound investment approach. Today’s market is a tough market. Rule No. 1 is do not lose money. Rule No. 2 is do not forget Rule # 1.
The entry price is critical. It is good to buy stock at the right price. Like real estate, you make your money when you buy. The entry price is critical. The hunt for values in today’s market is in Global value equities and High Yield Bonds. If nothing is cheap, hold some cash (Warren Buffet). For preferred shares, shareholders have been losers lately because they have not held value.
On my other blog I wrote yesterday about Medtronic PLC (NYSE-MDT) ... learn more. Next, I will write Equitable Group Inc (TSX-EQB, OTC-EQGPF) ... learn more on Wednesday, October 16, 2019 around 5 pm.
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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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