For Canadian investors taking a look at the new batches of economic data that consistently get released showing Canadians are growing ever more indebted, the picture may look quite bleak at first glance.
I have to admit these debt numbers that continue to climb do keep me wondering how firms in the technology, consumer goods, and lending sectors will do in the event of a global crisis, but there are plenty of opportunities available for long term investors looking to stay invested, and perhaps beef up the defensive portions of their portfolios.
Focusing on non-bank, non-consumer goods companies is where I would start. There are simply too many "story" companies out there that are seeing their share prices climb to new highs amid growth projections that are just out of this world.
Think about the various cannabis players in the market, and how much growth has been factored into the share prices of these relatively insignificant companies (on a global scale), and you get the idea. Staying away from the story, and focusing on the fundamentals, is what will get a good conservative investor though good (and especially bad) times.
While some banks do look attractive, and I remain a supporter of long-term investors buying in and continuing to buy, should share prices drop in this sector, I do think investors ought to stay away from secondary or tertiary lenders with sub-prime lending portfolios.
Now is not the time to "reach for yield," but rather to buy companies that have consistently provided investors with a solid dividend yield, and continue to raise their dividends over time.
Invest wisely, my friends.
