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The Globe and Mail

Best investing bets for 2013 from Rosenberg and Gartman

The Inside the Market blog brings you direct access to some of the leading portfolio managers and investing strategists in North America every Tuesday through our live Q&A discussions.

Over the last few weeks, we asked several of our guests what their outlook was for 2013. The following is a few of the comments we heard. (Our live chats resume Tuesday, Jan. 8 at 1 p.m. (ET). See the full archive of our live chats on the bottom of this page.)

David Rosenberg, chief economist with Gluskin Sheff + Associates Inc.:

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"I think it will be flat year for equities but what worked in 2012 should work in 2013 - namely, safety and income at a reasonable price or SIRP. One thing is for sure... interest rates are going nowhere ... likely down at the longer end of the curve. ...

The conservative investor should maintain a defensive posture. An emphasis on fixed-income and bond proxies within the stock market. Accumulation of cash flows is key, as it was this year. Credit spreads, as an aside, are still wide enough to present an opportunity given low and relatively stable default rates. ...

I do believe that the third leg of the deleveraging cycle, which involves the federal government, is going to be a dominant headwind for growth. I also am concerned over the thin supply-demand balance for oil and geopolitical risks. Europe will also continue to make the headlines. ...

I do like the loonie for a whole host of reasons. Spreads at the front end of the curve. More Fed balance sheet expansion. No fiscal cliff here though we will see fallout. A clearer fiscal picture here at home. I think that valuation in the Canadian market has improved markedly in the past 18-24 months relative to the USA. The key for outperformance here will rest with commodity prices and in turn China. On that score, I am optimistic, though tentatively so. So I wouldn't be surprised of the TSX reclaims leadership, though there are still defensive and yield-oriented segments in the USA that I still favour. ...

We are bullish on Canadian oil. All the forecasts of US energy dependency are just that. Forecasts. OPEC is tapped out, including Saudi Arabia. This was the first cycle where the producers did not invest in infrastructure for future production. And there is the geopolitical risk, and here I am talking about Iran. The key for Canada will be nurturing the capacity to ship the stuff out. But yes -- we are very constructive on the outlook for the oil companies."

Read the full transcript here

Dennis Gartman, economist and editor of the widely followed The Gartman Letter:

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"I think gold goes much higher in Yen terms and right now it is trading around Yen 143,000/oz, and with the government there that shall be taking power in January fully committed to a Bank of Japan that prints 'unlimited' sums of Yen, I can readily see gold trading to Yen 225,000/oz over the course of the next several months. ...

Gold equities have me interested for the first time in years. Gold equities trailed gold bullion badly, but now they are beginning quietly to gain upon bullion. I watch the ratio of the HUI Index to gold bullion and about four months ago that ratio began to move in the HUI's favour. For long-term buyers of gold, buy the stocks; for traders and for those wishing to own gold in Yen terms, trade the spot forex market and the gold futures or the GLD ETF. ...

Specific gold stock picks? I hold to the thesis that bigger is better. I know what Barrick's doing... and they are long standing clients. I know what ASA Ltd. is doing... and they are long standing clients of mine. I know what Newmont's doing... and they too are long standing clients; so I'll always err in favour of the big boys. The things that trade on Vancouver and OTC are best left to those younger or wiser than I."

Read the full transcript here

Andy Nasr, portfolio manager with Middlefield Capital who runs the ActiveIndex REIT:

"We expect the (REIT) sector to deliver good returns in 2013, supported by strong fundamentals and well balanced demand/supply. ... We are expecting returns of "approximately 10 per cent - 15 per cent, which is roughly similar to the total returns achieved in 2012. We would encourage investors to be selective and focus on buying real estate issuers with strong management teams and good organic growth potential. ... There are excellent investment opportunities in both Canadian and U.S. markets, but investors should be selective and consider risk/reward. We draw on numerous resources to determine which issuers we should buy and which markets we should invest in (global or Canadian)."

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Read the full transcript here

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