Canadian economist David Rosenberg is known as a perpetual bear. That framing is a little unkind. Let’s just say Mr. Rosenberg is always cautious and is more than aware of the many risks. But certainly he will dwell or concentrate on those risks. We might think that it is the job of the economist to ‘beware the negatives’. In a recent interview Mr. Rosenberg revealed what was in the big bear portfolio.
Here’s the link to the Financial Post interview that was posted on their YouTube page. It’s an engaging video I would encourage you to watch it.
But I will certainly outline the key points and takeaways for you. And yes, we’ll get to the big bear portfolio.
Mr. Rosenberg sees a dreadfully slow economic recovery. He uses the word ‘sclerotic’. And it’s all about the consumer and consumer demand.
Maudlin Economics reinforces that on the consumer front, unemployment is the driver. Here is a must read and a must follow.
That post references the following Tweet, and follows up with some shocking charts.
Based on the consumer and more, Mr. Rosenberg sees a fishhook shaped or L-shaped economic recovery. And here’s more bear piling on. From a recent Globe and Mail article –
Economists at the UCLA Anderson School of Management stated in a report that the pandemic had “morphed into a Depression-like crisis.” They estimate that the economy declined at a 42% annual rate in the second quarter and predict that the lost ground will not be made up until 2023.
The stock market is not the economy.
Of course don’t tell that to the stock markets. They’ll do whatever they want. As we continue to learn, the stock market is not the economy. Those Robinhooders still love their stocks.
And on the simplicity front, the more traditional Balanced Portfolio barely felt a thing.
The more bearish economists will suggest that the stock markets may learn to count again, one day. And many economists and investment gurus feel that the traditional balanced portfolio might not get the job done. Mr. Rosenberg is shaping his portfolio for a period of stagflation. He feels that could arrive in 2-3 years.
Yes that word stagflation may send many investors to investopedia.
For the investor it was/is a time when not much works against the beast known as vigorous inflation. David Rosenberg wants to protect against that event.
What’s in the big bear portfolio?
For the last few years my favourite bear has been a fan of higher quality dividend payers.
Mr. Rosenberg also likes Gold and precious metals and commodities. On the stock side – COVID-friendly consumer staples. I had covered that topic on Seeking Alpha with the lower volatility sectors do it again in the recent correction. The big bear portfolio will also include some of the new consumer technology staples. We simply can’t live and work without many of these companies.
On the bond front real return bonds and TIPS. Yes, we can get those bonds with a built in adjustment to cover off inflation.
Of course you can cover off much of the above with ETFs. For those who are interested in protecting their portfolio against the possibility of an era of inflation or stagflation, I’ll be back with a post on the stagflation ETF portfolio.
More Weekend Reads.
This was a very popular post on myownadvisor. There are two expenses stealing your early retirement dreams. Mark suggests that it’s the big ticket items or events that we should concentrate on. Yes I ended a sentence with a preposition. I could see no other way around it.
Though Mark certainly does recognize that the small stuff can add up. That was my focus in my personal finance book – Oh look, I just found $888,000 in your coffee.
OK, it’s not a book it’s just a very short 1000 word blog post. Seriously, I think that’s all it takes, who needs a book? Spend much less than you make. Live beneath your means. And invest on a regular schedule in a low-fee manner. Avoid the high fee crap.
And then Mark is bang on to put housing and transportation on the table. That’s where the money goes. That’s where there is perhaps the greatest opportunity. My wife and I are living proof. Our sensible approach to real estate was the main driver of our net worth. And we drove old cars for so many years. At one point, both vehicles had over 250,000 kilometers on the tickers.
The bare bones retirement.
On MoneySense I really like this post from Jason Heath on the bare bones retirement. How much can you get from government sources when you do not have portfolio income? Jason also looks at scenarios when you might have a modest portfolio.
Retirement savings with little or no savings.
On findependencebub Jonathan Chevreau unpacks the work from home ETFs.
The theme of emphasizing Work-from-Home (WFH) and Stay-at-Home (SAH) stocks to stay partially invested in stocks but to protect against the ravages of a second wave of the Coronavirus bear market.
Once again, that’s an interesting theme and read. Should you have COVID-friendly stocks and ETFs?
The Dividend Guy looks at two dividend income picks for the times. You’ll find one Canuck (a big bank) and a US holding.
More on Canadian banks.
On the big Canadian banks Scott Barlow dug deeper into a recent RBC report that suggested …
I have read that report. It’s in-depth and fascinating. I’ll be back to post on that report on this site and on Seeking Alpha.
On Maple Money Michelle Jackson discusses turning your skill set into income.
On Stock Trades Nelson Smith looks at the top Canadians REITs for 2020. Of course that sector has been hard hit with the stay at home economy.
On Passive Canadian Income here’s Rob’s June update.
FiPhysician says generalized retirement advice is often ‘bad’.
The Sunday Investor looks at socially responsible investing ETFs and offers up this interesting take …
In the meantime, if you are already an investor in the Jantzi Social Index ETF or a similar ESG fund with higher fees, consider using sector ETF’s instead. You’ll pay about the same in fees, but you’ll end up with much more flexibility to not only invest in the sectors that are more socially responsible, but also ones that perform better as well.
And on The Evidence Based Investor Jonathan Clements says – Safe yields? RIP.
And the scary Tweet of the week. A reminder to be careful and smart out there.
Thanks for reading. Please offer your thoughts in the comment section. Would you make any adjustments based on the big bear portfolio?
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Have a great day,
Dale
I’m extremely worried about how COVID will play out this fall/winter. It hasn’t quite put me in “bear” territory, but I wouldn’t be surprised if we saw a pull back. Insightful article, thank you.
Thanks AnotherLoonie. While we should always be in possession of a sensible financial and investment plan, it can be a good idea to tweak along the way. And the risks can change along the way. Again, I’m mostly surprised that most do not protect against a drastic change in economic conditions. We have that recency bias.
Dale