Peter returned to give us a number of insights on investing in the current market because let's face it - at the moment no-one knows where things are going to be week to week. The markets are as volatile as that serial bankrupt baboon in the White House so i was delighted Peter was happy to give an update two weeks on.
The overriding factor influencing markets currently is money supply. There are vast amounts of cash around after the Central bank and Government stimulus measures. Infinite amounts of printable cash chasing finite amounts of physical assets. This is why stock markets are rallying in the headwind of awful news.
1. Silver: Peter suggested that silver looks undervalued at it's current price. One once of gold buys 112 ounces of silver. The medium level for this ratio is 65. So, if you like gold you should love silver. Goldcore (of whom Mark O'Byrne spoke at our first event) articulate here why silver can be a good investment and particular in times of uncertainty.
2. Trading versus investing: jumping in and out of the market is not investing, it is trading. Trading is something that requires huge experience and a strong stomach. Don't get burnt as an amateur jumping in and out of the market. Investing is spotting undervalued assets and holding onto them to realise your investment over time. (years not months)
3. Recession Vs. Depression: sorry to be the bearer of bad news but according to Peter it's not a case of will we have a recession but rather will it be a recession or depression and this is contingent on how long the lock-down lasts and therefore how much lasting damage it will do to the economy.
4. Irish shares: Peter suggested why buy either Irish or UK shares right now when you can buy anything across the globe. Irish bank shares in particular have legacy technology challenges with some outdated kit and are likely to be doing considerable fire fighting over the coming years with struggling customers in light of the onset of recession.
5. US election: while it may seem a world away and perhaps not relevant to us, the outcome of November's US election could have a big effect on us and in particular, Irish pensions with their high concentration in US stocks. Trump winning would mean more isolationist policies weakening the economy further.
6. Oil: Pardon my ignorance but I was unaware of how the oil futures market operates and if there's anyone in the same boat, here's the simple version of how it works - Michael O''Leary for example buys his oil in advance using the futures market. The traders who own the current May futures market realised that they had nowhere to store the oil they were due to receive, (futures contracts have physical delivery). In a market of plummeting demand with aviation, manufacturing etc collapsing in light of the crisis, there is a glut and all storage has been taken. A trader can sometimes swap their May futures for longer dates ones to avoid delivery and the race to do that forced the market into negative pricing (sell at any cost).
Finally he reiterated that he believes US shares are overvalued and pointed out that while cards/platforms like Revolut now also offer the opportunity to purchase shares. The bulk of what they offer is US shares which he thinks do not offer value. De Giro continues to provide excellent value for those looking to buy shares with a very low commission. There has been a backlog to get an account opened but that is easing.
Peter continues to favour a portfolio using the following asset mix.
Emerging Market Equities
Global Commodity Equities
Physical Precious Metals Bullion
Precious Metals Miners