The Nature of the Business

“Ahead of the Street” Column, by Mitchell Clark, B. Comm.

There’s a lot of uninspiring news floating around and it’s tough not to get caught up in it. As published by the World Trade Organization, global trade fell about 12% in 2009, the sharpest drop since 1945. There are debt woes abroad and unemployment and housing worries at home. All told, it’s pretty difficult to be bullish on stocks right now. In fact, it’s pretty difficult to be bullish on anything in capital markets.

Long-time readers know of my affinity for gold and silver, as well as agricultural commodities. I continue to advocate investing in farm land, but then again, that really isn’t very practical for the majority of investors. I would say, however, that there are several funds that were recently put together to pool investor resources and seek out reasonably valued arable land. Still, this isn’t something that most investors are interested in (which suits me just fine).

And let’s not forget that there is a demographic headwind coming our way, as the baby boomers downsize and the population ages. So, it’s no wonder that a lot of individual investors aren’t doing much right now. Frankly, there isn’t a lot to be doing in capital markets. My view is that it’s going to be low and slow for quite a long time. I hope I’m wrong, but that’s how I see things.

The lackluster environment for stocks does, however, present an opportune time to be researching, watching and waiting for the strongest growth companies in the marketplace. If you know what you want going forward, now is the time to be looking. Not necessarily buying, but looking.

I know that I want some gold. I want some junior mining opportunities and I want some China. I also want some specific investment themes, like alternative energy, agriculture and some dividends. What I can’t control is investor sentiment and the trading action in capital markets. I can, however, make my list of the absolute best companies that fit what I want to own when the timing is right.

As I’ve written before, I’ve learned over the years that, at any given time, there are actually very few (if any) really attractive investment opportunities. No doubt, it takes a lot of courage to step up to the plate and invest in a business when the rest of the world believes the sky is falling. Right now in the investment landscape, there is absolutely no rush to do anything. Investment risk is high for new positions and, like the economy, capital markets are fragile. Time and timing are always the most important assets in the investment business. Right now, we’ve got lots of time to wait for the right timing to present itself. I’ve got my list ready, but I’m mostly sitting on the sidelines waiting to pounce. It’s the nature of the investment business; you have to go with the prevailing flow.