3 Key Takeaways from the New Orleans Investment Conference
I just got back from the New Orleans Investment Conference and let me tell you, it was one heck of an experience. With a 45-year history and a long list of incredibly knowledgeable presenters and attendees, this event always offers the chance to interact with some of the best and brightest analysts, experts and investors.
[My colleague Sean Brodrick was there, too. He's back at his desk today, getting ready to host his urgent online event, "High-Profit Gold Stock Forum: Ask Sean ANYTHING." He's revealing two red-hot gold stocks set to soar … three gold stocks to AVOID like the plague … and how you can lay claim to a FREE pure-gold bar. Click here to tell Sean you're coming.]
If you made the trip, I hope you enjoyed your time there. If you couldn’t go, I understand. We all have a lot going on and traveling to Louisiana isn’t an option for everyone.
So, to help you out, let me share some of the insights I gleaned there — including three key investor takeaways for the rest of 2019 and beyond.
But first, there are three observations I made based on what the experts were saying ...
First, I’m not the only one worried about corporate debt and its potential to cause significant havoc in the bond and stock markets.
Danielle DiMartino Booth, a former Dallas Fed adviser who authored the book 2017 “Fed Up,” shared several slides and bullets on business debt in her presentation.
I also had some interesting conversations with another expert whose work topic I respect and who you’ve probably seen many times on CNBC: Peter Boockvar, CIO at Bleakley Advisory Group.
The general idea that has us both worried is that there is a ton of this corporate debt. A lot of it is junkier than Wall Street would have you believe. And if this debt gets significantly more expensive to issue, more difficult to obtain, or both, American corporations could find themselves in major trouble.
Not only would a bunch of them have problems paying back what they previously borrowed, but they also wouldn’t be able to keep borrowing additional billions to buy back their own shares. This would cause losses and volatility in both the corporate debt and stock markets.
Second, investors and presenters were incredibly excited about the prospects for gold, silver and mining shares over the next few years.
Several focused on how 0% and sub-0% interest rates should boost the value of precious metals. Others talked about the likelihood of a pickup in volatility and its positive impact.
Plus, a few noted that central banks in China, Russia and elsewhere are trying to lessen their dependence on the U.S. dollar. They’re accomplishing this by selling dollar-denominated Treasuries and buying gold for their reserve hoards.
Third, there was a wide range of opinions about the stock market.
One economist with whom I’ve discussed markets and debated at various MoneyShow events, Mark Skousen, has remained very bullish on equities. He said the economy still has room to grow and that investors should buy cash-rich companies that are buying back stock and paying generous dividends.
But I also participated in a panel focused on asset bubbles and bust risk with Euro Pacific Capital chief strategist Peter Schiff and co-founder of Real Vision Group Grant Williams
We all agreed that bust risk is elevated because many assets are very richly valued. We also discussed how the current implosion of the profitless tech IPO bubble and the recent tremors in some of the riskiest corners of the corporate bond market could be “canaries in the coalmine” of a broader market stumble. Anticipating the timing of this bust is more difficult, however.
In sum, this remains a market that’s packed with both elevated risks and enormous opportunities. Here's what you can take away from all the expert investors I met with in New Orleans...
1) Rather than aggressively chase stocks at these elevated levels ... especially given the multiple failed breakouts we’ve seen post-January 2018 ... stay cautious and somewhat defensive.
In my Safe Money Report, I’m zeroing in on a smaller number of highly rated, more-resilient, less-volatile stocks and ETFs rather than loading up the boat. You can get the details by clicking here.
2) Dedicate a larger portion of your investment dollars to precious metals and miners than you did before the bull market in gold and silver began last summer. Pullbacks, corrections and shorter-term stumbles should be viewed as buying opportunities ahead of further moves higher over the next couple of years.
3) Keep a close eye on these very real bubble risks, like we saw in the mid-2000s around the peak of the housing cycle. I know I certainly will. I'll be sure to sound the alarm in my newsletters and let my subscribers know how to get best-positioned for protection and profit.
Yes, it may seem odd to talk about these issues when stocks are flirting with all-time highs. But it’s precisely when both optimism and valuations are at extreme levels that you should be wary of underappreciated risks.
Until next time,