‘Don’t have a knee-jerk reaction. If the market overreacts, that’s probably an opportunity‘
By Ian Bickis, The Canadian Press
January 23, 2025
Excerpt:
While inflation is currently back at the Bank of Canada’s two per cent target, the potential imposition of tariffs by the U.S. and the weakened loonie could spike again, while also hitting Canada’s limited economic growth, said Johnston.
The latest threats, adding to the existing troubles in Canada with lagging productivity and trade deficits, could create the weak growth and elevated inflation that result in stagflation, he said.
“The things that Trump is proposing to do to Canada are going to make our stagflation problem worse. And so investors really have to be alive to that,” he said.
He said investors can’t make the assumption of strong growth ahead given the potential trade disruptions and other forces, and should assess their portfolios against what could be a weakening middle class.
His investment thesis has led him to focus on areas he sees as resilient to a recession and erosion of middle-class buying power like farmland, automotive repair and home security systems.
“I’m not pleased that all this is happening, and I wish there were other things we could invest in. It’s just we can’t ignore the fundamentals,” said Johnston.
Original article here