19 Apr 2015, Posted by Prem Malik in MALIK'S CORNER, No Comments.

Malik’s Corner……What’s bothering clients? Investment Insights Looking Ahead.


Good afternoon on another cold day in March.

 

Some client worries and in no order……When is oil going to recover?  Should I convert US dollars to Cdn as the exchange is so good? Should I sell my bank stocks? And what about the US…when is it going to meltdown? …and when are we going to have some warm days?

 

Oil: I attended a presentation by David Wolf of Fidelity, ex Bank Of Canada Advisor to Mark Carney. He defined the current oil crisis to a supply crisis and not a demand crisis. So quite different to the 2008 demand crisis when oil rebounded back up. The supply crisis is being caused by the surplus of oil, creating a downdraft on the price….and according to him, oil could stay down for some time.

 

Benefit of low oil are huge especially for the world’s largest importers of oil……US, Eurozone, China, Japan and India and in this order. Cheaper oil results in improved bottom line for all manufacturing and more money in the hands of the consumer. So in brief, good for global growth and so investment strategy should be global in nature. IMPORTANT

 

Negatives…..Canadian dollar will be negatively impacted and may stay at current levels for some time. However oil savings are going to be felt at the pumps and means more dollars in the hand of the Canadian consumer.

 

US dollars vs Cdn Dollars

 

Correct answer: We are so close to the US….so not a bad idea to hold a US dollar savings account at your local bank. I would not move in and out of currencies….I believe the exchange rates offered at the banks are not that pleasant and the fees charged are quite high as well. As we live in Canada, we should have a majority of our funds in Cdn dollars.

 

Selling my Cdn bank stocks?

 

Canadian banks are long term holds…..and currently on sale, according to money managers on the street.  Not a good idea to sell if they are held for the long term. The current dividend yield makes them quite attractive buys.

 

US Meltdown?

 

I don’t think so….. A strong US dollar allows the world’s biggest companies in the US to use this to their advantage and invest globally. Furthermore cheaper oil is having a very positive impact on the bottom line of manufacturing companies and making quite profitable. I do expect volatility to continue for the foreseeable future…..but the trend is upwards. I would not still put short term funds in the stock markets….whatever predictions you read in the local press.

 

Investment Insights, the Long Term View

 

I read a recent report, The Long View, Investment Insights, by the Capital Group. It is enclosed for weekend reading as I believe some of the observations are important reading for young parents as they picture what the world will look like for their children in the next few years.

 

Five key observations from the report…please read it.

 

  1. The digital revolution is transforming the world and lifting mankind to a new level. The innovation in technology, and the adoption of products among consumers is changing the world of how we see it.
  2. Money is setting a new speed record…..e.g. South Korea’s GDP per person has grown from US$2,600 in 1980 to $YS$32,000 in 2014. This new wealth is going to have a transformational impact on the world’s economy.
  3. Innovation opening new fronts in the war on Cancer. Medical science appears to be on the brink of a paradigm shift in the treatment of many troubling conditions. The payoff from an investment nature will be huge.
  4. US Energy Independence…..loud and clear. The report shows the production levels of some US states to be more than some countries!
  5. The driverless car…..will eradicate automobile accidents, eliminate traffic and significantly reduce the real estate needed for automobiles…..freeing land for more productive use.

 

Enjoy the read…..I am excited about the future for the generations to come.

 

Kind regards and thanks for being clients….I enjoy my relationship with each one of you.

 

Thank you,

 

Prem

 

Disclaimer

 

The information contained herein are obtained from sources believed to be reliable, however, its accuracy or completeness is not guaranteed and Queensbury Securities assumes no responsibility or liability. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities. These comments and opinions are not necessarily the opinions of Queensbury Securities Inc. Securities mentioned may not suit all types of investors. Before making any investment decision,

contact your investment advisor to discuss your investment needs.


Posting your comment...

Leave A Comment


Subscribe to this comment via Email