If I Could Only Buy 2 Investments For The Next Year

seekingalpha09-13

Between soaring geopolitical risks, macroeconomic uncertainties, and impending Fed rate cuts, the markets are in a period of rapidly shifting dynamics.While I do not tend to invest with a single-year ...

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Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"MSFT","symbol_name":"微软","start_time":0,"source_url":"https://seekingalpha.com/article/4720740-if-i-could-only-buy-2-investments-for-the-next-year","article_id":"2467993785","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1493150114/image_1493150114.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2467993785","pubTimestamp":1726157593,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Between soaring geopolitical risks, macroeconomic uncertainties, and impending Fed rate cuts, the markets are in a period of rapidly shifting dynamics.While I do not tend to invest with a single-year 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ACC"},"translate_title":"如果我明年只能购买2项投资","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BAM":1,"WPM":1,"NEM":1,"IAU":1,"GOLD":1,"BN":1,"AEM":1,"BEP":1,"BEPC":1,"US7Y.BOND":0.9,"US6M.BOND":0.9,"US5Y.BOND":0.9,"US3Y.BOND":0.9,"GLD":0.9,"US30Y.BOND":0.9,"US2Y.BOND":0.9,"US12M.BOND":0.9,"US10Y.BOND":0.9,"US912797GW17.BOND":0.6,"MSFT":0.6,"US912797HE00.BOND":0.6,"US912797GL51.BOND":0.6},"content_text":"Between soaring geopolitical risks, macroeconomic uncertainties, and impending Fed rate cuts, the markets are in a period of rapidly shifting dynamics.While I do not tend to invest with a single-year outlook, it is still worth taking current macro factors into account.I share two picks that, I believe, will offer a very attractive risk reward in the current environment.   MicroStockHub With wars raging in Eastern Europe and the Middle East, a threat of war seemingly growing by the day in the Far East, and a very tense and tight U.S. presidential election coming up, global geopolitical risk and uncertainty have not been this high in a long time. Moreover, the U.S. economy is flirting with recession, as the most recent jobs numbers indicate that the labor market is weakening meaningfully. Consumer debt, including credit card debt, is at record levels. Additionally, there is a tidal wave of real estate debt maturing in the upcoming years that was previously underwritten at meaningfully lower interest rates than where interest rates stand today. Moreover, the U.S. manufacturing sector is already in a recession. Many of the U.S.’s major trading partners, including Japan, China, the United Kingdom, and other European nations, are all either in recession or battling major economic headwinds of their own. Meanwhile, it also appears that the United States is about to embark on a rate-cutting cycle by the Federal Reserve. The growing symptoms of economic weakness, combined with inflation at least appearing to not be at immediate risk of spiking higher, seems to be paving the way for the Fed to begin cutting rates. It hopes to navigate a soft landing for the economy without pushing inflation higher. With so much geopolitical and macroeconomic uncertainty in mind, if I could only buy two investments for the next year, it would be these: Investment #1 The first investment I would buy (which is one that I have already been bullish on for the past year) is gold (XAUUSD:CUR). In fact, last October I notified readers that I was very bullish on gold and buying it aggressively. Since then, gold has soared higher: Data by YCharts However, I think gold continues to offer a very attractive risk reward over the next year, at least for the following reasons. First, it is a time-tested safe haven that has been viewed as a favored store of value for millennia. As a result, during periods of geopolitical and/or macroeconomic turmoil and uncertainty, it almost always outperforms the stock market. This makes it a great hedge for a portfolio should a worst-case scenario play out in Europe, the Middle East, and/or the Far East. It also provides a hedge if political and civil unrest were to erupt in the United States following the presidential election. Second, if the U.S. slides into recession and the stock market faces a steep sell-off, gold will likely outperform the stock market. Third, historically, when the Fed has pivoted from rate hikes to rate cuts, gold has also often outperformed, as it becomes more attractive as a store of value relative to cash, whose interest rate is declining. Fourth, central banks across the world are buying gold hand over fist as part of the ongoing de-dollarization of the global monetary system. Finally, the U.S. government is running record spending deficits. Regardless of who wins the presidential election, this fiscal irresponsibility appears likely to continue. With debt already so high, it seems increasingly likely that confidence in and the value of the dollar is much more likely to decrease rather than increase relative to gold over time. When you put all this together, I think that gold provides a very valuable hedge against risk over the next year and, over a much longer time horizon, is virtually guaranteed to move higher. There are numerous ways to gain exposure to this bullish thesis for gold, including blue-chip miners like Newmont Corporation (NEM), Barrick Gold Corporation (GOLD), and Agnico Eagle Mines Limited (AEM), physical bullion, as well as gold ETFs, SPDR® Gold Shares ETF (GLD), iShares Gold Trust ETF (IAU). At a minimum, I think it is important to hold some bullion stored in a safe place, as well as some gold ETFs that can provide liquidity. You should also have the potential to sell calls or puts to generate some income from the position. For those who want to be more aggressive, buying some of the aforementioned miners or streamers like Wheaton Precious Metals Corp. (WPM) is also an attractive way to get leverage on the price of gold. Investment #2 The other investment I would buy for the next year, if I could only buy two, would be Brookfield Renewable Partners L.P. (BEP), and Brookfield Renewable Corporation (BEPC). The reason I think Brookfield Renewable Partners is such an attractive buy over the next year is that it appears to me to be a “heads I win, tails I do not lose much, if anything” type of investment, similar to gold. The reason I believe this is that BEP has been beaten down severely over the past few years due to rising interest rates. It runs a fairly capital-intensive growth model, and its long-dated, contracted cash flows are bond-like in nature. Therefore, they tend to fall in net present value when interest rates rise and increase in net present value when interest rates drop. Data by YCharts As a result, I think that if the Fed does indeed cut rates aggressively and long-term interest rates come down as well, BEP is very likely going to soar higher. It did so when the Fed slashed rates following the COVID-19 outbreak. Data by YCharts This is especially true because the stock looks quite discounted on a distribution yield, as well as a price-to-AFFO (adjusted funds from operations) and a yield-plus-growth basis. Its distribution yield is about 6%, its expected AFFO per unit growth CAGR is about 10% over the coming years, and its price-to-AFFO valuation multiple trades at a steep discount to its historical averages. As a result, investors can look forward to a mid-teen annualized total return from the yield plus growth alone without accounting for potential valuation multiple expansion as well. Even if interest rates do not fall meaningfully and inflation remains persistently high, thereby tying the Fed’s hands on how much they can cut rates, BEP has a very strong balance sheet. It earns a BBB+ credit rating, long-dated debt maturities with few near-term maturities and significant liquidity. Additionally, the vast majority of its cash flows are indexed to inflation and contracted. This means that in a “higher-for-longer” inflation and interest rate environment, it should not suffer much on a cash flow basis. Its distribution should be quite secure, and it should still be able to grow at a solid clip. This is thanks in large part to its large development pipeline and significant deal flow that it generates through its external management by Brookfield Asset Management Ltd. (BAM), Brookfield Corporation (BN), enabling it to sell assets and recycle capital into new opportunities on a highly accretive basis. Additionally, if the Democrats have a successful election this fall, renewable stocks will likely soar higher, as they did in 2020 and early 2021 following the Democrats sweeping into power. Meanwhile, even if the Republicans prevail in the fall elections, BEP should still do just fine, as it will enjoy tailwinds from interest rate cuts, and its development pipeline and contracts give it a very secure cash flow profile. Moreover, even if Republicans promote policies that are less favorable to renewables, BEP just signed a massive agreement with Microsoft Corporation (MSFT), a company that is ideologically dedicated to investing in renewable energy. This should provide BEP with significant growth potential for several years alongside their existing development pipeline and numerous opportunities to invest in its numerous other international markets where it operates. Eventually, the political winds will likely blow back in their favor at some point down the line in the US as well, giving their growth runway another jolt forward. Investor Takeaway  While neither of these investments is risk-free, and it is extremely difficult to predict the performance of an investment over a single-year period, gold, and BEP seem to be about as likely to succeed as any over the next year. Of course, I tend to take a much longer-term view in making most of my investments. Thus, the vast majority of my portfolio is shaped by a 3-5 year outlook rather than a single-year outlook. But for investors who want to increase their odds for success over a short period of time, it is worth taking a closer look at gold and BEP.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.4","shortVersion":"4.26.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2467993785"}