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Arthur Salzer featured in Making Sense of the Markets this Week

An inflection point for investors

Arthur Salzer of Northland Wealth Management penned a very good piece for the Financial Post. Investors should revisit their portfolios after the market’s latest inflection point.

Salzer offers some very good real-life examples of how a new era, a new paradigm, can be ushered in, and the themes and trends can take hold for a decade or more.

For example, from that post…

“Richard Nixon took the United States off the gold standard in order to pay for the Vietnam war. Subsequently, commodities and precious metals outperformed stocks and bonds for most of the 1970s.”

When the U.S. raised rates to historic levels in order to crush inflation in the late 1970s and early ’80s, that set the stage for stocks and bonds to outperform for an extended period to the year 2000. We then experienced the dot-com crash.

And then the rise of China’s economy and the explosive growth of its urban population created a need for commodities, and the stock markets of countries such as Canada and Brazil soared.

More recently, we’ve seen the undeniable trend of technology dominating our lives and our economies. Tech companies have been driving the U.S. stock market for several years and we saw that force accelerate during the pandemic.

Looking for additional shifts hiding in plain sight, Salzer offers…

“… value stocks should begin to perform better after posting dismal numbers since 2011. In general, value stocks such as banks have been lagging due to the negative interest rate environment globally, with North American banks doing slightly better than their European counterparts. There are also opportunities in commodities, which have likewise been weak, since the excess supplies created a decade ago, which caused mines and plants to shut down, have been used up. Gold and especially what is becoming digital gold, bitcoin, may continue to do well this decade.”

He also points to emerging markets as an ongoing opportunity. There is an expression that demographics is destiny. Growing populations and younger populations that are forming new households will consume goods and services at a greater rate than stagnant or declining populations.


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