August 4 saw the largest equity market selloff in more than two years, but one investment expert told Business in Vancouver he does not believe clients should panic and sell North American equities.
“We’re very comfortable with both U.S. and Canadian equities,” said Jim Gilliland, who is head of fixed income at Vancouver’s Leith Wheeler Investment Council Ltd.
“We’ve been focused a little bit more on adding Canadian equities, but I would imagine that we’d start shifting some weight into U.S. equities in the next week or two.”
This is partly because he believes that the Canadian dollar is overweight in value and that the trend will be toward a weaker dollar.
Standard advice is that an average portfolio should probably have about 60% equities and 40% bonds, although Gilliland said much depends on a person’s wealth, age and appetite for risk.
Those who have a lot of longer-term bonds might want to use the recent equity selling as an opportunity to shift into equities, he said.
Gold has been hitting all-time high prices recently, but Gilliland believes that may end in the next couple years.
“Gold looks overvalued relative to how much it costs to mine it,” he said. “It’s overvalued relative to its cost of production.
“It’s at US$1,600 and the cost of production is significantly less. Over a long time frame, such as the next two or three years, that could converge. So, we’re more comfortable putting money into other parts of the market, like industrials, like energy companies rather than gold companies.”
Glen Korstrom
Twitter: GlenKorstrom