Whereas he’s been telling purchasers 2023 will likely be completely different, his technique this 12 months is to proceed to look at the market and modify his gross sales to the gales. He added that with strategists from Morgan Stanley – and even Canaccord’s personal – pondering we’re heading right into a recession, that is seemingly priced into the market. Traders, subsequently, ought to take a cautionary stance.
The twist, he stated, is that the market is saying one thing completely different. With central banks tightening financial coverage and slowing the economic system, each bonds and shares are bucking typical knowledge and “preventing the Fed”. “Let’s see who is true,” Klein stated. “The 2 forces are at play and it’s going to be very attention-grabbing to see how the 12 months performs out.”
Portfolio positioning
Klein himself is bracing for a recession. His lowered his tech weighting right down to virtually zero final 12 months after which just lately rebuilt it again to about 15% of his fairness publicity. Whereas he notes he’s not chasing the market, however following it, he’s shopping for “some falling angels”, particularly names which are down 50% to 75% from their zenith. Nevertheless, he nonetheless doesn’t wish to get too aggressive on tech.
Klein, who focuses on North America, additionally has some assets and actual property in his profile, however no staples and no gold. He’s additionally lightened up on oil and is chubby shopper discretionary, betting that the buyer on the excessive finish, like Ferrari, Luis Vuitton, and Mercedes Benz, will proceed to be positive. He’s additionally positioned for the buyer who will likely be challenged by the recession and retailers in Dollarama and Tim Horton’s.
“I’ve made a variety of modifications this 12 months,” he stated. “It’s most likely been probably the most energetic administration that I’ve performed in a very long time. However it’s important to remind your self {that a} portfolio could be like a bar of cleaning soap: the extra you contact it, the smaller it will get. There’s a positive line between hanging on and driving out some volatility and having high quality companies and attempting to be proper on a regular basis. You have to be cautious you don’t overthink and overwork the portfolio, however you may’t stay static, both.”