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Past performance is no guarantee of future results. Source: Bloomberg, Financial Sense Wealth Management
Why the Business Cycle Matters
5
Future investment
returns diminish later
in the business cycle.
This dynamic is
mitigated by shifting
away from riskier
assets like stocks and
into safer investments
like cash and bonds.
Source: Bloomberg, Financial Sense Wealth Management, Hat tip David Rosenberg
Current Expansion Likely to Set Records
8
Several key areas of the economy typically peak well before the onset of recession.
Corporate Profits Typically Peak Halfway Through the Cycle
14
Source: YouTube.com
Another Hallmark of Late Cycles – Elevated Sentiment 22
Source: Ispot.Tv
The Two Most Powerful Investor Emotions
23
FEAR
GREED
Source: Source: Kevin Kallaugher, www.kaltoons.com (used with permission)
Another Hallmark of Late Cycles – Elevated Sentiment
24
Past performance is no guarantee of future results. Source: Bloomberg, Financial Sense Wealth Management
Another Hallmark of Late Cycles – Elevated Sentiment
25
Source: Bloomberg, Financial Sense Wealth Management, Hat tip David Rosenberg
While Recession Risk Remains Low, It’s Rising
26
Source: CNBC
Landmines & Opportunity in the Next Recession
28
“The optimist sees opportunity in every danger, the pessimist sees danger in
every opportunity.” - Winston Churchill
“Good luck is when opportunity meets preparation, while bad luck is when
lack of preparation meets reality.” - Eliyahu Goldratt
29
Never Was So Much Owed by So Many to So Few
Source: David Rosenberg, “Charts with Dave” (09/19/2018), Used with Permission
34
iShares Investment Grade U.S. Corp. Bond ETF (LQD) ~ $34B in assets
Source: Bloomberg, Financial Sense Wealth Management (Data as of 09.11.18) Source: Bloomberg, Financial Sense Wealth Management (Data as of 09.11.18)
35
“There’s always a
bull market
somewhere”
~Jim Cramer
40
Source: Bloomberg, Financial Sense Wealth Management Source: Bloomberg, Financial Sense Wealth Management
In response to the last three recessions, While the Federal budget deficit expands
we’ve seen the Fed slash interest rates just over 6% of GDP.
nearly 6%...
46
%
The median Fed forecast for the terminal rate this cycle is 3.375%
as of the 09/26/2018 FOMC meeting.
%
The average budget deficit-to-GDP ratio prior to the last six
recessions was -0.60%. We are likely to enter the next recession
with a -5% budget deficit!
Source: Barry Bannister, Stifel Nicolaus – Macro & Portfolio Strategy (09.05.2018)
56
Focus on Income
Source: Barry Bannister, Stifel Nicolaus – Macro & Portfolio Strategy (09.05.2018)
Focus on Income
57
Allocate to high-
dividend paying stocks
in the next downturn.
Percentiles
Future investor
capital will likely be
deployed in these
growing regions in
the decade ahead.
Source: Kleiner Perkins, “Internet Trends 2018” Source: Kleiner Perkins, “Internet Trends 2018” Source: Kleiner Perkins, “Internet Trends 2018”
Focus on Future Growth Themes
62
63
Lunch