Veteran financial experts have advised investors to park their money in the Canadian equity market as it has not yet adjusted to high rates and the businessmen could benefit from the market.
Bay Street veteran and founder of Rosenberg Research, David Rosenberg said investors looking to put their money to work in a heightened interest rate environment could find opportunities in the Canadian equity market, bonds, and cash.
In an interview with BNN Bloomberg’s Jon Erlichman on Thursday, Rosenberg said the S&P/TSX Composite Index is rewarding investors with the highest yield globally.
“The all in equity yield in the TSX is 16%. It’s one of the highest in the world,” he added.
“For people that have been involved in the US market, start bringing some money home in the Canadian market — it’s dirt cheap.”
Another strategy Rosenberg advised to investors was to park their money in cash holdings, which he says is perfectly appropriate during an elevated interest rate environment.
“I know people will say well it’s five per cent (return on cash holdings), and look at what the Nasdaq 100 is doing. Well — think about 5% last year when the market was down almost 20%,” he said. “Have some dry powder and get paid for it — to me that’s just common sense.”
One other corner of the investment world Rosenberg has turned to during this time is long-term bonds, especially as we head into a possible recession, he said.
Meanwhile, Ed Devlin, founder of Devlin Capital and former head of Canadian portfolio management at PIMCO, said, “I like sticking to a recession hedge — which is government bonds.”
Devlin noted that both the equity markets and credit markets (such as corporate bonds), have not yet adjusted to high rates and for this reason he prefers to stick to cash and government bonds for safety.
“I’d keep my cash somewhere between cash and 10-year government bonds,” he added.