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(Kitco News) - With the new year just around the corner, this week’s expert says the best way to make money in 2019 is to mimic famed investor Warren Buffett.
It is week 3 of Kitco’s Outlook Invest Like The Experts series, and according to U.S. Global Investors’ CEO Frank Holmes, there are still a lot of potential sectors for investors to gain in 2019 – if they do it the right way.
However, despite the optimism, Holmes warned that investors should be prepared for a “potential seven-year bear market.”
The 2019 Outlook Experts Series continues so be sure to check back every Friday on Kitco to find out where the experts are looking to invest next year.
PART I: Hold Even More Cash In 2019 - RBC's Gero
PART II: Investors Brace Yourselves, It's Time To Hold Cash - Doug Casey
PART III: Invest The Warren Buffet Way In 2019 Says This Expert
PART IV: Stay Away From U.S. Markets, This Sector Will Boom In 2019 - Peter Schiff
PART V: Jim Rickards Says Cut Your Losses and Invest Here in 2019
Expert: Frank Holmes
Claim to Fame: CEO, U.S. Global Investors,
If an average homeowner has disposable income, what percentage do you think they should invest in 2019? And why?
“I recommend the 10 percent ‘golden rule,’ but also remember to diversify with stocks and bonds, their ratio being dependent on your age and risk tolerance,” Holmes says.
Where should someone invest in 2019 – which sectors are likely to boom in 2019?
“Emerging markets look attractive as they’re oversold,” he says, adding that these markets will likely “find a bottom when U.S. interest rates peak.”
What are the first steps one should take before making any investment?
Diversify with savings and investments, he says.
“Remember to be disciplined in your approach and rebalance annually; maintain a balance between income and growth, with 10 percent in gold,” he adds.
What is the biggest red flag for you when it comes to considering a new investment?
For Holmes, the most important factor to consider when making a new investment is the “CEO track record.”
“It’s also important to be aware of value traps – buying stocks just because they look cheap. I prefer GARP investing, or growth at a reasonable price, like Warren Buffett.”
Will 2019 be the year of the active or passive investor?
According to Holmes, regulation has pushed more investors towards passive investing.
This, according to Holmes, has significantly, “altered the flow of funds to the cheapest indexes, not IPOs or active management.”
“I think this passive push will create the next bubble,” he adds.
Looking back, what was the best investment you made in 2018?
“I would say our investment in gold jewelry disruptor, Mene Inc. Its business model has seemed to resonate with consumers and investors alike,” he says.
Mene sells directly to the consumer and prices its merchandise fairly and transparently – based on the changing value of gold.
What was one missed opportunity for you in 2018?
“FAANG stocks were definitely a missed opportunity,” he says.
What was the biggest market surprise for you in 2018?
One of the biggest surprises for Holmes was the push towards regulation of cryptocurrencies, which he thinks may “crush” the markets.
“The global regulatory G20 strategy to crush the cryptocurrency industry came as a surprise,” he says.
During the summit, G20 leaders announced their intention to develop regulation related to digital currencies in an attempt to fight against money laundering and to counter terrorism financing. The G20 summit took place in Buenos Aires, Argentina on December 1, 2018.