Thursday, November 10, 2011

Advice From Artemis Capital

At a lunch the other day I was asked what future trends made me so gloomy about the market, and how to protect one's assets against those trends.  It reminded me of this very succinct recent advice from Artemis Capital at the end of a long and logical assessment of current economic trends: "The global currency regime will face significant changes in the ensuing decade.  The self-reinforcing cycle between Debtor-Developed and Emerging-Creditor nations is likely to unravel, perhaps violently.  The European crisis may tip us into a second global recession.  Global policy makers are out of stimulus options.  Dollar hegemony may be challenged in the future."  And what to do? "Prepare your business for the potential of a second global recession.  USD is historically strong when the economy is weak - watch for reversal.  Evaluate your portfolio returns against a global basket of currencies and commodities.  Diversify exposure during periods of dollar strength and de-leveraging into: a) Nations with healthy finances and commodity driven economies (e.g. Canadian Dollar, Norwegian Krone, Australian Dollar), b) Tangible assets like real estate and metals (but not on leverage), and c) Alternative asset classes (e.g. volatility and managed futures)."  Good advice, I think, from people more knowledgeable than I.  Do your own due diligence.

The Good News: The Canadian markets are closed tomorrow, Remembrance Day.