Rosie: 7 Investment Strategies for Recession
I do not see evidence that the next recession is imminent.
However, that does not prevent me from reading others who do, to wit Gluskin Sheff’s David Rosenberg.
Rosie has been one of the biggest bears on the street, despite rising equity and commodity prices (perhaps because of why we have rising equity and commodity prices).
Regardless, this is his 7 point plan to get ready for the next recession:
1) “High-quality corporates” plus companies with “A-type” balance sheets and “BB-like yields.”
2) Reliable dividend paying Stocks (including preferreds).
3) Low debt-to-equity ratios, high liquid asset ratios, good balance sheets, no heavy debt.
4) Hard assets: Oil and gas royalties, REITs – focus on income stream.
5) Sectors / companies with “low fixed costs, high variable costs, high barriers to entry/some sort of oligopolistic features, a relatively high level of demand inelasticity.” This includes utilities, consumer staples + health care.
6) Alternative assets that do not rely on “rising equity markets” or are independent of volatility trades.
7) Precious metals. Specifically, he puts a $3,000 target on Gold.
The era of aggressive growth is giving way to an era of income equity. For those of you so defensively inclined, this portfolio of ideas is a good place to begin thinking about where to hide.
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July 27th, 2011 at 10:12 am
Go long on the military industrial complex.
Guns , socialized revenues and no risk margins, are winning over butter and the tea party is short on T Bills.
Because the Generals and Admirals:
At Aviation Week on line:
“Top brass for the Army, Air Force and Marine Corps said July 26 that deeper cuts would bring about “fundamental” and “structural” changes to how they view their missions — or even what those missions might be — during a House Armed Services Committee’s subcommittee hearing on readiness.”
If the conservatives/tea party were not long on war the US would cut $400B from the 2012 exorbitant empire’s burden on the taxpayer. Shutter the occupations and close the empire. It is time with the nation broke to change those mission and go back to the common defense.
July 27th, 2011 at 10:16 am
I do not see evidence that the next recession is imminent.
Is it not usually the case that these events sneak up on us? I see Q2 GDP downgrades to the area of 1.2% based on today’s Durables report. We’re on the cusp.
July 27th, 2011 at 10:47 am
Kucinich…
“Curiously, the President didn’t explain in his primetime address to the nation that ‘the deal’ he has been advocating cuts Social Security benefits and pushes back the retirement age. These changes are unwarranted and indefensible.
“Social Security is 100% wholly funded up to the year 2036 without any changes whatsoever. It has no place in the debt ceiling debate at all. Furthermore, it is not the government’s money but the money of the workers who have paid into the program their entire lives.
“Threatening the withholding of Social Security checks to advance an agenda that includes cutting Social Security benefits is not befitting of the Democratic Party, it is not fair to the American people, and it represents a sellout of the interests of seniors.
“I want to be supportive of the President. It would be easier to be supportive if the President’s candor matched the level of his eloquence.”
http://www.thestatecolumn.com/ohio/rep-dennis-kucinich-white-house-now-conceals-plan-to-cut-social-security/
Read more: http://www.thestatecolumn.com/ohio/rep-dennis-kucinich-white-house-now-conceals-plan-to-cut-social-security/#ixzz1TJiicFPi
Obama is going to be fighting a two front war with Dems supporting domestic spending and repubs faving continued spending on the “long war”.If O’B does a LIEberman and continues to align with the enemy he won’t be renominated.
July 27th, 2011 at 11:24 am
In any event….Rosie’s strategy is actually very good for almost anytime, isn’t it?
(except for the precious metals)
July 27th, 2011 at 12:12 pm
1 through 4 have been the chalk plays for 3 years now. Not to say they’re unwise now, but it’s a bit yesterday’s news.
July 27th, 2011 at 2:11 pm
[...] Seven places to hide via David Rosenberg. (Big Picture) [...]
July 27th, 2011 at 4:26 pm
“I do not see evidence that the next recession is imminent.”
Barry, if a debt ceiling deal is agreed upon that cuts several trillion dollars from the budget, won’t this have a contractionary effect on economy and throw us back into recession?
~~~
BR: It wont help . . .
July 27th, 2011 at 7:23 pm
Two add-ons on first reaction:
Make sure your preferreds are trading below the call price of the issue.
The Cuggino Permanent Portfolio Fund is a pretty good holding for a portfolio of this type.
July 27th, 2011 at 7:53 pm
This sounds like the formula for a Conservative-Moderate Growth retirement portfolio. Works under any economic conditions.
July 28th, 2011 at 8:51 am
Wonder how this mix has changed for “Rosie” from last year, two and even three years ago. His 7 points are pretty much what I have been doing for four years. Now I start reading this stuff and it makes me nervous, maybe it’s time (or soon will be) to move on.
Yes, I missed much of the run up in tech etc. but my mix sure helped me sleep at night since I saw the economy as a sick puppy and overall my “asset allocation” has done fairly well. I have stop losses on 90% of my stock. And yes precious metals and farm real estate are a significant part of my holdings. Might need to pair the percentage of precious metals some more and farm real estate has moved squarely into the bubble territory also. The window to sell farms is probably rapidly closing if I haven’t already missed the best window. But I am emotionally attached to the farms (never a smart thing with investments) , so be it.
July 31st, 2011 at 6:56 am
[...] Seven places to hide via David Rosenberg. (Big Picture) [...]