Gary Shilling’s investment themes for 2012

By Prieur du Plessis, on January 10th, 2012 posted in: Investment, Markets, Money 5 people had their say - chime in!

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John Mauldin’s Outside the Box report this morning highlights Gary Shilling’s take on 2012. Shilling believes the global economy will be dominated by an era of deleveraging and sees the following causes slowing down growth over the years ahead:

1. U.S. consumers will shift from a 25-year borrowing-and-spending binge to a saving spree. This will spread abroad as American consumers curtail the imports of the goods and services many foreign nations depend on for economic growth.

2. Financial deleveraging will reverse the trend that financed much global growth in recent years.

3. Increased government regulation and involvement in major economies will stifle innovation and reduce efficiency.

4. Low commodity prices will limit spending by commodity-producing lands.

5. Developed countries are moving toward fiscal restraint.

6. Rising protectionism will slow – even eliminate – global growth.

7. The housing market will be weak due to excess inventories and loss of investment appeal.

8. Deflation will curtail spending as buyers anticipate lower prices.

9. State and local governments will contract.

As far as his investment themes for 2012 are concerned, Shillings lists the “attractive” and “unattractive” items below.

Attractive:

• Treasury bonds
• Selected income-producing securities
• Small luxuries
• Consumer staples and foods
• The U.S. dollar, against the euro and commodity currencies
• Selected healthcare providers and medical office buildings
• Rental apartments
• Productivity enhancers
• North American energy producers, ex renewables

Unattractive:

• Developed country stocks
• Homebuilders and related companies
• If you plan to sell your home, second home or investment houses any time soon, do so yesterday
• Selected big-ticket consumer discretionary equities
• Consumer lenders
• Banks
• Junk securities
• Developing country bonds
• Developing country stocks
• Selected commodities
• Many old tech capital equipment producers

Source: John Mauldin’s Outside the Box (via Investors Insight), January 9, 2012.

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