Author, former MP favours developing economies

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Garth Turner, 61

Occupation: Financial author, lecturer and blogger

Portfolio: Assets allocated to Canadian/global stocks (33 per cent), residential real estate (30 per cent), government-agency and corporate bonds (22 per cent), preferred shares (10 per cent), and gold exchange-traded funds (5 per cent).

The investor: "I made my first serious money in real estate during the inflationary 1970s and 1980s," says former Member of Parliament Garth Turner. "Following a bout of mental infirmity which led me into politics, I made more serious money as an author and speaker."

Mr. Turner then recognized the need to diversify into financial assets. "I have been an equities, bond and commodities guy ever since, continuously diminishing real estate as a proportion of my overall net worth."

Faith in the basics: He believes in the importance of asset allocation, diversification and tax avoidance. He not only follows these precepts in his personal portfolio but "spells" them out in his most recent book, Money Road: Tools for the wild ride ahead.

Likes dividend and commodity stocks: His allocation to stocks emphasizes tax-advantaged income from dividend stocks. There is also exposure to metal, crude oil and agriculture stocks, which he believes will experience growth because of strong demand from China and other emerging countries.

Houses and GICs yesterday's news: "In these days of unpredictability, we face higher interest rates, inflation and taxes as we reap the bitter fruit of Keynesian economics and runaway governments," declares Mr. Turner. "This means shunning houses and GICs."

"The house-loving, risk-averse Canadian middle class is in for a big surprise," he adds. His real-estate blog GreaterFool.ca expands upon this theme.

Favours developing over developed countries: Be wary of investing in the developed economies. "The U.S. is in decline with a bottomless housing market, Tea Party [tax revolts] rising protectionism and rampant deindustrialization. Europe is stagnating. Market indexers are bound for disappointment."

The place to be is in the commodity sector. "Lots of smart money is streaming into commodities since global growth will happen despite the developed countries."

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Best move: "Having my butt kicked out of politics…."

Worst move: "Running for office…."

Advice: "Markets are ripe for a significant correction. Interest rates are rising. Taxes will explode because of profligate governments and aging Boomers."

"I would caution against the allure of DIY investing. Unless you're ready to work at it full-time, get an adviser."

"Oh yeah, and don't believe everything you read in the paper."

Special to The Globe and Mail

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