Michael Gayed: European Financial Sector On Life Support
Tom welcomes returning guest Michael Gayed, Portfolio Manager at Toroso Asset Management, to the show. Michael is the author and publisher of the Lead-Lag Report.
Michael discusses the differences between volatility and risk. Risk comes when you might have a permanent loss of capital, while volatility can usually be overcome with patience. It’s essential to identify the weather that is coming in markets. Conditions are always changing, and you need to be aware of the trends.
Michael feels we are heading toward a storm. The Fed has broken the bond market when they choose to buy up assets. Stocks and bonds may no longer be sufficient to diversify your portfolio.
Fed policies have enabled prolific spending and an ever-increasing wealth gap. The argument today is that debt doesn’t matter, but that will have unintended consequences.
Today, there is a large degree of complacency surrounding the risks. European financials are looking horrendous. Lumber may be a warning sign of a weakening economy. The Fed has stated they will do whatever it takes to keep the equity markets propped up.
Faith in the Fed will burst at some point, but that bubble will likely last for a while longer. More money is flowing into hedging assets like gold. Further weakness in commodities like oil, lumber, and energy could sign a coming storm for the global economy. He says, “Risk is always where you don’t see it.”
Time Stamp References:
0:00 – Introduction
0:40 – Risk versus volatility.
2:30 – Treasury markets.
3:40 – Bonds and diversifying.
4:50 – Money velocity, deflation vs inflation.
6:40 – What inflation means to the Fed.
7:40 – When will Faith in central banks fail.
9:25 – Elections and possible risks.
11:30 – Signals before the February crash.
13:20 – Second guess “Don’t fight the Fed”
14:20 – Gold correlation to equities.
15:30 – Inflation scenarios and gold.
17:55 – Other precious metals.
19:10 – Dividend yielding stocks in your portfolio.
Talking Points From This Weeks Episode
- Differences between volatility and risk.
- The Fed, bonds, rates, excess debt, and consequences.
- Difficulty in increasing money velocity.
- Investor complacency around risk.
- Commodities and correlations.
Michael A. Gayed, CFA is Portfolio Manager at Toroso Asset Management, an award winning author and publisher of The Lead-Lag Report.
Michael is respected as an award-winning, results-oriented Investment Manager showcasing 15 years of successfully executing initiatives that result in significant revenue growth. He is known for identifying and implementing various investment strategies to capture market anomalies while maintaining a business mindset beyond portfolio management.
Michael offers a proven track record of evaluating business/investment opportunities, quickly understanding market dynamics and relationships that few tend to focus on. He is also an out-of-the-box thinker committed to strengthening organizations’ financial performance through dedicated hard work and a passion for investing.
He is a graduate of (Cum Laude) NYU Stern School of Business with a Double Major in Finance & Management and has a Bachelor of Science in Finance & Management. He is a Chartered Financial Analyst from the CFA Institute.