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Donald Coxe at a 2008 conference. (Larry MacDougal for The Globe and Mail)
Donald Coxe at a 2008 conference. (Larry MacDougal for The Globe and Mail)

strategy

BMO adviser Donald Coxe to halt long-running newsletter Add to ...

Donald Coxe, one of Canada’s best known stock-market prognosticators, plans to cease publishing his market letter.

For the past 20 years, Mr. Coxe has been issuing massive 10,000- to 12,000-word missives outlining his investing views, laced with a healthy dose of his conservative political philosophy. But at 76, he’s decided to hang up his pen to concentrate on investment advice for the funds he helps manage.

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December will mark the last issue of his Basic Points newsletter, which has recently been appearing once every two months.

As an investment writer, Mr. Coxe is best known for his view that the financial world is in the middle of a “commodity super cycle.” That’s a long period during which the prices of energy, food, metals and other raw materials rise – in the current instance, driven by the rapid growth of emerging economies.

Mr. Coxe said producing a market letter while also working as an investment strategy adviser at the Bank of Montreal, which distributes his newsletter, has been a strain.

“I’m only young compared to people like Warren Buffett,” he quipped. “Other strategists have lots of young CFAs working for them. I don’t have anything like that. I do my own work.”

Mr. Coxe began his prognosticating career with Basic Points at one of BMO’s forerunner firms, Nesbitt Thomson, back in October, 1992.

“I feel pretty good about the fact that it’s managed to last for 20 years. In the financial world not many one-person publications survive that long,” he said.

Although Mr. Coxe has worked as an investment strategist and money manager, he got into the writing end of the business to capitalize on the popularity of client reports he gave customers, which began to be circulated by hand throughout Bay Street.

He remains convinced that stocks benefiting from higher commodity prices are the place to be, although not all are equally desirable.

He’s loaded up on agriculture-related shares and precious-metal investments in the funds he manages, but is cooler toward businesses producing base metals.

Crop prices have been on a tear because of poor harvests, leading to higher farm incomes and land prices, a boon “for those investing in agricultural stocks.”

Mr. Coxe, who is now based in Chicago, likes precious metals because central banks in many advanced countries are expanding their balance sheets through the purchase of government bonds, in a bid to jump-start their flagging economies. He believes the action is the first step in paper-money creation and could lead to future inflation, which would lend support to precious-metal-related investments because they’re perceived as a long-term store of value.

Mr. Coxe is cautious on the outlook for base metals. He says higher rates of economic growth will be required to produce better prices for those materials. Base metals have an additional drawback – existing supplies can be melted down and the material reused, reducing demand for new mine output.

Oil doesn’t suffer from this drawback. Even though oil and gas supplies are expanding in the U.S. through new extraction technology, “I still feel much more secure owning shares of a good oil company than I would of the average manufacturing company.”

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