Don Coxe's Investment Recommendations
From the most recent copy of "Basic Points": (I will add you to the email distribution of Basic Points, just PM me with your email)
INVESTMENT RECOMMENDATIONS
1. Continue to maintain an overweighted position in oil stocks with long
reserve life indices in politically secure regions, particularly in the Alberta
oil sands. The share price of a company with more than fifty years’ reserves
will continue to fluctuate in response to oil price changes, and oil prices
will remain weak until there is clear evidence of a return to fast global
growth, but there are so few such companies that they deserve a huge
scarcity premium.
2. Continue to maintain an overweighted exposure to mining stocks with long
reserve life indices in politically secure regions. Base metals have no OPEC
to stop their downward corrections, but great orebodies are still rare, and
the mining majors are richer than ever before. Takeovers will continue, so
stocks of strong companies will not fall as far as metal prices. Whenever
the global recovery resumes, base metals should be the top-performing
commodity asset class.
3. Continue to maintain an overweighted position in gold, whether through
the mines or the ETF. The serial debauching of corporate bonds, and the
dissemination of junk derivatives through the financial system mean that,
if a true global slowdown comes, systemic risk will return. Gold’s true
value these days is not as an inflation hedge, but as a protection against
serious problems for the dollar and/or the financial system.
4. Build an overweight position in agribusiness stocks. If the El Niño turns out
to be stronger than currently forecast, be aggressive in your purchases.
5. Build an overweight position in Emerging Markets stocks. The world of
tomorrow will become increasingly dependent on the increasingly scarce
resources that EMs have in abundance—commodities and workers.
6. Maintain a longer-than-benchmark bond duration in balanced portfolios.
Buy long zeros as hedges against portfolio exposure to falling industrial
commodity prices.
7. The Canadian dollar is the most undervalued of the leading currencies.
Canadian-based investors should ensure they hedge their exposure to US
dollar-based investments. American clients should diversify their bond
exposure by reducing Treasury holdings in favor of Canadas. All other
investors should be building increased exposure to high-quality Canadian
assets.
8. If Nasdaq continues to outperform the S&P in coming weeks, expect a
stock market correction. This is a record run for US stocks without a 10%
pullback. Nothing is forever, particularly a Nasdaq-led rally.
9. This is the Year of the Cicada in the Upper Midwest, when billions of
homopterous insects will suddenly emerge from the ground and chirp.
This phenomenon occurs every 17 years. The last two happy times for
cicadas were not happy times for investors.
AI
