I have been doing this for 40 years, and I have never seen anything like this. “This is the most difficult, vexing set of conditions that any of us have ever seen — in part, because not only is there a combination of many cross-currents in the markets, but you have financial repression going on at the same time. And there are resource constraints that are coming to play here, too. ”
So states Bob Fitzwilson, President and Director at The Portola Group, Inc.
As we’ve repeatedly warned here on the site, financial assets have marched well into fantasy territory. Time-honored price correlations have vanished. Bad news has become good news for stocks and bonds. Economic weakness is met with cheers.
“I’m not the first person to use this phrase, but we’re investing in a hall of mirrors. This is not supposed to happen. There cannot be a sustainable gap between the measures of how an economy is doing, such as the stock market, and the underlying factors.
It’s true that there are companies, particularly larger companies, that have done very well. And there are some small and medium-sized companies that have done very well. But you cannot have a situation with unemployment high and real disposable income coming down without eventually there being a discontinuity.
From our standpoint, there has always been a connection between the GDP and the health of the economy, and workers and the markets. Now we have this widening gap; there cannot be a continuing rise in equity indicators while the real economy is heading in the wrong direction.
It’s a very, very confusing, murky, opaque environment for investors. Whether you are doing it professionally or you are doing it yourself, everybody should realize that none of us has ever seen anything like this.
From our standpoint, you try to find the few things that are remaining that are reasonably trustworthy, and one of those is cash flow. When we look at companies that might have an interest in, cash flow is probably the number one thing that we are looking for. ”
Chris and Bob delve into the details on the type of cash flow Bob and his team look for in companies, as well as discuss the outlook for other investments Portola prefers such as the precious metals and energy plays.
If after listening to this podcast, you find yourself interested in connecting with Bob and his team to learn more about their advisory services, please use the form here to do so.
Transparency note: As a result of our public endorsement of Bob’s firm, Peak Prosperity has a commercial relationship with them. The details of this relationship are clearly presented in writing during the referral process — but the punchline is, our relationship does NOT result in any increased fees to those who become clients.
NOTE: It should go without saying: this discussion should not be construed as individual financial advice by those listening to it. The content should be taken as informational and educational in nature only. Investment advice must be tailored to your specific personal situation (which Chris and Bob are obviously unaware of) and should be obtained directly from a financial advisor you trust. Before acting on any of the statements made in this podcast, we advise you do just that.