We believe that funding budget deficits by the Federal Reserve printing money could result in an equity market bubble. The goal is to build a portfolio that participates in some of the bubble’s upside but avoids taking excessive speculative risks. This video outlines our recommendations.
1. Dominant technology companies trading at no more than about 35x earnings.
2. European equity markets poised to benefit from Europe’s successful containment of COVID-19 and a new, coordinated European stimulus effort.
3. Housing stocks poised to benefit from rapidly rising home prices but trading at much lower valuations compared to the 2004-2006 housing bubble.
4. Swapping energy stocks and REITs for banks.
5. Gold miners and silver miners trading below their 2011 peaks despite gold breaking out to new highs.
6. For investors with sufficient risk tolerance, ETFs or mutual funds that invest in commodity centric emerging markets like Chile, South Africa, and Indonesia.
