How to be a late cycle investor

January 14, 2019

Every business cycle is different, but history tends to repeat itself with general trends and cyclical fluctuations.

The current economic expansion is now more than three times the average length at 117 months and that means we are approaching the latter stage of this cycle. That doesn’t mean it will end any time soon, but eventually conditions will change.

A late-cycle phase is typically defined by a slowdown in growth, low levels of unemployment,  rising inflation and a flattening yield curve.  You may see earnings growth slow and profit margins shrink. Some of these things are starting to emerge, though not all  – earnings growth is strong, but inflation is notably absent.

But when the economy eventually fluctuates your investments will fluctuate too. But rather than worrying about where we are in the business cycle, it is far better to pay attention to companies.  Historically, late-stage and defensive sectors include healthcare, energy, utilities and consumer staples outperform.

Those with well-defined businesses, who are leaders in their industries with a history of profitability and steadily rising dividends will do best.  These companies thrive in all conditions and fall least and recover first when conditions improve again.

Harvest Portfolios Group  CEO Michael Kovacs founded the company in 2009 with these principles in mind –   investing in quality that generates steady growth of capital while offering a dependable income stream in all business conditions.

From a single fund Harvest now offers 12 ETFs, four structured funds and two mutual funds. The philosophy is about growth and income while maintaining simplicity and transparency.

Successful investing comes back to basics: sticking with quality, including companies with a history of dividends, diversification, patience and sticking to a plan.  -AM

Read more about Harvest Portfolios Group funds here.

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The views and/or opinions expressed in the blog are of a general nature and are for informational purposes only. Blog contents should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage personal investment strategies. Investors should consult their investment advisor before making any investment decision.  

 

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Disclaimer

You will usually pay brokerage fees to your dealer if you purchase or sell units of the Fund(s) on the TSX. If the units are purchased or sold on the TSX, investors may pay more than the current net asset value when buying units of the Fund(s) and may receive less than the current net asset value when selling them. There are ongoing fees and expenses associated with owning units of an investment fund. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. An investment fund must prepare disclosure documents that contain key information about the fund. You can find more detailed information about the fund in these documents.

Certain statements in the Harvest Blog are forward looking Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or  “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS.

FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe to be reasonable assumptions, the portfolio manager cannot assure that actual results will be consistent with these FLS.

Unless required by applicable law, Harvest Portfolios Group Inc. does not undertake, and specifically disclaim, any intention or obligation to update or revise any FLS, whether as a result of new information, future events or otherwise.

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