Good morning Canada! I did a quick hit with BNN in Canada this morning touching on some macro points:
- I argue, as I did in this research note, that future market returns are likely to be lower than we’ve become accustomed to due to the low interest rate environment and slow growth in developed markets. A balanaced portfolio simply can’t generate the types of returns that investors have become accustomed to.
- This is going to force investors out of their comfort zone and into instruments that are inherently higher risk instruments such as emerging market equities or other higher return instruments.
- I update my recession index which shows that the US economy continues in a healthy expansion. At a macro level this is useful for understanding whether there is high probability of a tail risk event in the future knowing that the largest annual declines in the stock market have tended to occur inside of recessions.
- I discuss the biggest myth in investing – the idea that you have to “beat the market”. I touch on the concept of the Savings Portfolio and why I think most investors should avoid strategies that claim to be able to “beat the market”.
- Lastly, I touch on some alternative ideas and why I think the low return environment is going to force investors to be more dynamic in their approaches. 60/40 and 50/50 isn’t going to cut it in the future. You likely need to diversify into other instruments and a more dynamic asset allocation approach going forward.
You can watch the full segment here: