Investing Today: 2024 Strategies from Thane Stenner, CIM®, FCSI® 

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With the Canadian economy facing high consumer debt, rising insolvencies, and volatile mortgage rates, the investment environment is anything but straightforward. Senior Portfolio Manager & Senior Wealth Advisor Thane Stenner,  CIM^®, FCSI^® of Stenner Wealth Partners+ at CG Wealth Management Canada is identifying opportunities amid these challenges.

As the Canadian economy slows, top wealth advisors like Stenner are turning their attention to commodities, resources, and debt. These sectors are showing promise even as real estate requires a more discerning eye. With interest rates predicted to drop by 200 basis points in the next 18 to 24 months, the financial landscape is set for significant changes.

What’s more, there are burgeoning opportunities in real assets and commodities like gold, silver, and critical minerals. These resources are currently undervalued, offering a ripe field for investments. Private credit and bonds also present favorable returns, especially for those willing to seek out global opportunities.

“In the next 24 months, expect volatility,” says Thane Stenner. “This environment can be daunting for ultra-high-net-worth investors, but it also offers unique investment possibilities.”

Current Economic Landscape in Canada

The Canadian economy is currently facing several challenges that impact its overall performance. Factors like high debt levels, rising insolvencies, and steep mortgage rates are just a few elements putting pressure on economic stability. Understanding these challenges can help you make informed investment decisions.

High Debt Levels and Insolvencies

High consumer debt is a significant issue in Canada, impacting spending habits and overall economic health. Imagine trying to juggle multiple balls at once—each representing a different debt. With so many financial obligations, consumers are finding it hard to spend on anything beyond the essentials.

Notes Stenner, “Insolvencies are rising dramatically. This is like a warning signal that many people can’t keep up with their financial commitments, which in turn affects businesses dependent on consumer spending.” 

When people stop buying, businesses can’t thrive, leading to a drag on the entire economy. Essentially, high debt levels and increasing insolvencies create a domino effect, hampering economic growth and consumer confidence.

Impact of Rising Mortgage Rates

The housing market is feeling the weight of high mortgage rates. Imagine you’re a homeowner or someone looking to buy a home; the cost of borrowing has surged. In fact, over the next two to three years, around 77% of all mortgages will come up for renewal, most at rates about 30% higher than before. This means homeowners will have to pay significantly more each month.

Forecasts suggest mortgage rates might drop by around 200 basis points within the next 18 to 24 months, which would provide some relief. However, this must be carefully managed to avoid triggering inflation. Falling rates might also open up new investment opportunities in real estate, as market softening could present some strong buys.

Understanding these dynamics is key for navigating the current economic landscape in Canada. Though the waters may be choppy, informed strategies can help you steer through with confidence.

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Investment Strategies: Commodities and Resources

As the economy faces various challenges, many see this sector as a viable opportunity for growth. Commodities and real assets are presenting considerably undervalued opportunities. Critical minerals, gold, silver, uranium, and copper offer a promising avenue for investment. Imagine the markets like a seesaw—right now, the S&P 500 is on one end, up high, while commodities are down low. This imbalance creates a buying opportunity for those looking to diversify their portfolios.

Long-Term Bull Market Predictions

Wealth advisors and industry players are eyeing a long-term bull market in commodities and resources. The market is in what could be described as the “early innings” of a prolonged positive trend. This phase should see a lot of activity, particularly mergers and acquisitions (M&A), as companies seek to capitalize on the undervalued sector.

Consider how these investment strategies align with your portfolio or long-term goals. With proper timing and research, commodities and resources present an exciting opportunity for diversification and potential growth.

Real Estate: A Cautious Approach

In today’s complex market, real estate investments require a careful and strategic approach. A top Canadian wealth advisor shares insights on how you can navigate the evolving landscape to find opportunities. The real estate market is facing unique challenges, but this also opens doors to potential advantages.

Identifying Future Opportunities

The Canadian real estate market is expected to experience a softening period, and this could bring strong investment opportunities within the next 18 to 24 months. The main factors contributing to this are high consumer debt levels, rising insolvencies, and high mortgage rates. These are straining the rebound of the Canadian economy, but also creating potential openings for savvy investors.

In the short term, volatility is expected. Interest rates might drop by 200 basis points over the next 18 to 24 months, starting as early as September. If you keep an eagle eye on this fluctuating market, you could potentially spot lucrative buys, both private and public.

This real estate market will be all about timing. Be ready to  take action on opportunities when the time is right. This means doing your homework now, so you understand the market dynamics and are prepared to act decisively when the moment arrives. Stay vigilant, and you could turn these challenges into your advantages in the world of real estate investing.

Debt Investments and Private Credit

Savvy wealth advisors in today’s market are eyeing debt investments and private credit as key strategies. With rising bond prices and attractive private debt opportunities, there are multiple avenues to consider. Here’s a closer look at what’s happening and what it means for you.

Bond Market Insights

The global economy is slowing, and while that sounds alarming, it offers unique opportunities in the bond market. When the economy cools down, bond prices tend to rise. For investors, this means there are buying opportunities that shouldn’t be overlooked.

When economic growth slows, central banks often respond by lowering interest rates to stimulate the economy. Lower interest rates generally lead to higher bond prices, creating a favorable environment for bond investments.

The prediction is that interest rates could come down by as much as 200 basis points over the next 18 to 24 months. This shift is expected to start as early as September. If you’re considering bonds, now might be the right time to act. The market’s current volatility only strengthens this case. With so much uncertainty, bonds provide a stable and reliable investment option.

Private Debt Opportunities

Alongside traditional bonds, private debt presents a compelling investment opportunity. At a time when public markets are volatile, private credit investments offer a haven with attractive yields. Currently, yields on selective private debt can range from 7 to 9 percent, which is quite enticing for investors seeking higher returns.

It’s crucial to be selective in this space. Not all private debt opportunities are created equal. This market requires due diligence and a keen eye for high-quality investments. The appeal of private credit lies in its ability to offer good risk-adjusted returns, often outperforming other fixed-income investments.

For Canadian wealth advisors, the search for these opportunities is global. They’re looking beyond the domestic market to find the best returns for their clients. By doing so, they can uncover hidden gems that offer better yields and lower risk compared to more traditional investment routes.

Navigating today’s market requires a keen eye and strategic precision. Amid the economy’s slow recovery, high debt levels, and anticipated interest rate reductions, careful investment selection is paramount. As the Canadian market remains volatile, your investment decisions must be well-informed and timely to capitalize on emerging opportunities. Choose wisely, and stay ahead.

Thane Stenner, renowned for his experience in wealth management, has an impressive academic background that includes graduating with honors from Arizona State University and participating in Harvard Business School’s Executive Program. He is cross-border licensed with FINRA in the USA, and with CIRO in Canada, with clients based in San Francisco and the Bay Area as well as across Canada.

His professional journey has spanned several high-ranking positions at Morgan Stanley Wealth Management, including Managing Director and International Client Wealth Advisor, where he spearheaded portfolio management for ultra-high net worth clients. Stenner’s insights have been featured in multiple prestigious outlets like the Globe & Mail, Canadian Family Offices, and BNN Bloomberg.

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