I do not see evidence that the next recession is imminent.
However, that does not prevent me from reading others who do, to wit Gluskin Sheff’s David Rosenberg.
Rosie has been one of the biggest bears on the street, despite rising equity and commodity prices (perhaps because of why we have rising equity and commodity prices).
Regardless, this is his 7 point plan to get ready for the next recession:
1) “High-quality corporates” plus companies with “A-type” balance sheets and “BB-like yields.”
2) Reliable dividend paying Stocks (including preferreds).
3) Low debt-to-equity ratios, high liquid asset ratios, good balance sheets, no heavy debt.
4) Hard assets: Oil and gas royalties, REITs — focus on income stream.
5) Sectors / companies with “low fixed costs, high variable costs, high barriers to entry/some sort of oligopolistic features, a relatively high level of demand inelasticity.” This includes utilities, consumer staples + health care.
6) Alternative assets that do not rely on “rising equity markets” or are independent of volatility trades.
7) Precious metals. Specifically, he puts a $3,000 target on Gold.
The era of aggressive growth is giving way to an era of income equity. For those of you so defensively inclined, this portfolio of ideas is a good place to begin thinking about where to hide.
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