Jim Rickards Says Cut Your Losses and Invest Here in 2019
Editor's Note:Kitco News has officially launched Outlook 2019 - Rush To Safety - the definitive reference for precious metals investors for the new year. We chose this year's theme as financial markets face growing uncertainty. With volatility on the rise, how do you protect yourself? Click here daily to see updated content.
(Kitco News) - Investors need to tread carefully this year and if they want a chance at being profitable, it might be wise to look to these sectors, says one famed investor.
Invest Like The Experts is back for its final week and best-selling author Jim Rickards joins Kitco News to share his investment advice for this year.
For 2019, Rickards said he is placing bets on cash, alternative assets and gold.
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 Buffett 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: Jim Rickards
Claim to Fame: Best-selling author of Currency Wars; Editor at Strategic Intelligence
1. If an average homeowner has disposable income, what percentage do you think they should invest in 2019?
“My favorite sectors are precious metals, mining, natural resources, real estate, bonds and cash,” Rickards says.
Assuming no leverage or use of home equity, he adds it is best for homeowners to break down their investments as follows:
- Cash (30%)
Because cash “reduces volatility in the overall portfolio and provides optionality in future investments as market drivers become clearer.”
- Public equities (20%)
Despite a 20% in stocks, Rickards notes that allocations should remain “low” because of “continued bear market behavior.”
- Alternatives (20%)
“This is a mix of private equity, venture capital, fine art and hedge funds,” he says, adding that they provide diversification and potential for higher returns in bear markets.
- Gold (10%).
Gold is a good investment as it hedges against inflation, currency, and a market crash, he explains.
- Treasury notes (10%)
According to Rickards, treasuries hedge against deflation and low credit risk while providing a steady income and potentially, capital gains.
- Real estate (10%)
Rickards says real estate also acts as an inflation hedge and provides a steady income. “Investors can also obtain leverage in this sector,” he adds.
2. Will 2019 be the year of the active or passive investor?
“Active investors will outperform,” he says.
When asked why, Rickards says that passive investors will struggle in a bear market. “The passive investors are moving in lock-step. That can work in a bull market, but it's disastrous in a bear market,” he explains.
“Active investors can be nimble, maintain cash as dry powder, and look for bargains.”
3. Looking back, what was the best investment you think you made in 2018?
For Rickards, the best investment he made in 2018 was in cash.
“It had a positive return and outperformed almost every other asset class in 2018,” he says.
4. What was one missed opportunity for you in 2018?
“I should have bought more gold at the lows of $1,185 per ounce in the late third quarter and early fourth quarter,” he says.
“With the Fed leaning to ease in 2019, we probably won't see those lows again.”
5. What was the biggest market surprise for you in 2018?
“Gold performed well considering the Fed was aggressive in tightening monetary conditions,” he says.
“Gold was down for the year, but not as much as expected and it had a strong rally in the fourth quarter.”
Gold prices continue to hold critical gains near its recent six-month high. February gold futures last traded at $1,289.70 an ounce, up 0.18% on the day.
6. What is the best investment advice you ever received?
“Cut your losses; live to fight another day.”