Gary Shilling’s Investment Ideas for a Hard Winter in the Real Economy

Published on
December 9th, 2020
Duration
51 minutes


Gary Shilling’s Investment Ideas for a Hard Winter in the Real Economy

Investment Ideas ·
Featuring Gary Shilling

Published on: December 9th, 2020 • Duration: 51 minutes

With cases spiking and economic data surrounding the recovery slowing or outright rolling over in many cases, it appears as though a hard winter is in store for the global economy. Gary Shilling, president of A. Gary Shilling & Co., is well known for having forecasted these types of downturns in the past and, along with Real Vision's Ed Harrison, discusses why he thinks we are in store for another economic downturn this winter. Shilling highlights real economic data like slowing job gains, increased COVID-19 deaths, and the potential for renewed economic shutdowns, but he cautions that the strange correlation, where bad news equals more stimulus and thus is bullish for equities, can draw out irrationality longer than investors might expect — even if stimulus fails to fully replace economic losses in the long-term. Shilling and Harrison also discuss his investment ideas that arise from this forecast: cautiously short equities, short dollar, and long treasuries. Filmed on December 4, 2020. Key Learnings: The real economy and market are once again moving in the opposite direction. Shilling argues that this disconnect will close and that the long bond may be the best way to play to it. He also sees the stimulus feedback loop as putting more downward pressure on the dollar.

Comments

Transcript

  • GG
    Gary G.
    20 December 2020 @ 03:48
    🥱
  • CM
    Cory M.
    15 December 2020 @ 23:14
    I don’t understand all the enthusiasm for Gary. He collects data well but his explanations are non-creative. At the end his use of “buy the rumor sell the news” was silly and suggests he doesn’t understand the expression. Perhaps his newsletter come across well. I am rarely disappointed by RV guests with a long term view, but alas.
  • RM
    Russell M.
    14 December 2020 @ 14:52
    Nice interview with someone with long term perspective!
  • HR
    Humberto R.
    9 December 2020 @ 11:31
    These guys love to talk about New York as if its the center of the universe. Come to Florida and live with rational responsible people that don't give a damn about the leftist narrative.
    • JF
      John F.
      9 December 2020 @ 12:54
      Totally agree. And I live in NY.
    • DS
      David S.
      9 December 2020 @ 18:21
      Warmer yes. DLS
    • NE
      Nathan E.
      10 December 2020 @ 06:30
      What does your comment have to do with investing? What 'rational responsible' advantage does living in Florida provide and who / what is the 'leftist narrative?' Please enlighten.
    • DR
      David R.
      10 December 2020 @ 23:52
      If I may be so bold as to paraphrase, which I believe is instructive for this year of US underperformance and possibly the start to a decade(s)-long underperformance, relative to some EM and especially Asia, "These guys love to talk about the US as if it's the center of the universe. Come to Asia (which now this year comprises over 50% of the worlds' total real GDP PPP in 2020 per the Financial Times recently) and live with rational responsible people (read no ZIRP, no QE, no big bailouts, no debt monetization, no Central Bank buying the corp bonds & mortgages, etc. except japan ofc), who don't give a damn about the American narrative.
    • mw
      michael w.
      14 December 2020 @ 02:51
      Exactly. Ed needs to come down to Texas. People are out and about, stores, bars, and restaurants are quite busy. People are even going to concerts.
  • IW
    Ian W.
    11 December 2020 @ 16:03
    Great interview overall, but I have to point out the misconception that Americans have re: South Korea. Korea is a free, democratic society not at all like China. However, they also have a Confucian/collectivist mindset as is common in the region and thus don't really need a "lockdown" order to stay at home. And mask usage is universal when you're sick or think others may be sick anyways, so the majority of Koreans have been able to live a pretty "normal" life this year.
    • DR
      David R.
      12 December 2020 @ 06:46
      Yes, the people did likewise in Japan with successful results controlling the virus there, in stark contrast to the West. The Japanese people saved themselves, not the doing of the government, about which the people are actually angry due to its incompetence. At least so I've read which could be inaccurate ofc. Lessons to be learned from when the "big" killer virus comes, instead of this very mild weak one, as will eventually happens. One model predicts in two years. Let's watch.
    • SL
      Sean L.
      13 December 2020 @ 07:20
      Maybe its more to do with the metabolic health of citizens rather than gov policy. The virus is only dangerous to older people with other health issues
  • MB
    Matt B.
    13 December 2020 @ 02:29
    It’s worth noting that while many people are avoiding brick-and-mortar due to fear of the virus, there are others who are avoiding these locations because they are sick of the masks, the limited seating, the hassle associate with trying to meet a larger group, etc. The virus is repelling some, the response is repelling many others.
  • AT
    Aananthan T.
    12 December 2020 @ 17:13
    I loved this interview for the big picture overview and clearly defined investment thesis. I didn't come here for portfolio pics and allocation over the the next year. Things change daily, weekly and noone has that crystal ball. Well done interview by Ed with one of the best in the macro business.
  • BS
    Benjamin S.
    11 December 2020 @ 00:35
    Enjoyed this one. Great interview Ed.
  • MH
    Michael H.
    10 December 2020 @ 23:09
    Mr. Market can and likely will stay irrational longer than investors with this "text-book" view can stay solvent.
  • TS
    Thomas S.
    10 December 2020 @ 13:26
    Enjoyed the conversation. Thank you. My biggest concern is about price distortion caused by continuing FED/Govt "support" for the economy and stock market. If things are so great, why do we continue to need stimulus ? At some point, mother FED needs to stop breast feeding ! Let's allow true price signals to surface and see which companies truly can support themselves. Isn't that capitalism ?
  • NE
    Nathan E.
    10 December 2020 @ 06:35
    Gary is clearly not a stock picker. He is someone who paints with a broader brush. But the message is clear enough - those who are long equities and banking on 'pent-up demand' and 'V-shaped recovery' should beware. Also history makes it clear that expecting quarter after quarter of stock market gains as 'normal' is complete folly. So what's the 'investment idea' takeaway here? Start looking at opportunities outside of the stock market and do some homework. Fortunately there are tons of videos on this platform regarding crypto, bonds, treasuries etc. that don't involve investing in the market. For what it's worth I bought the rumor in equities and will definitely be selling the news.
    • AI
      Andras I.
      10 December 2020 @ 07:52
      Swap one hysteria for another?
  • JR
    John R.
    10 December 2020 @ 03:39
    Been reading Insight for years. Just want to say thanks to Gary and that I appreciate his work.
  • BT
    Billy T.
    10 December 2020 @ 00:26
    Interview was light on investment, thesis, trade ideas, etc... heavy on covid and related responses and politics.
    • KB
      Kirk B.
      10 December 2020 @ 01:51
      Gary Schilling is a brilliant economist with a contrarian bent, which has produced an excellent long-term track record (although as noted in other comments, he, like all investment advisors, does have some misses). Over the years, I have read many of his articles and listened to his frequent interviews. This interview was quite disappointing. Way to much political blah, blah, blah. I had hoped for a better, more in depth discussion of his current investment thesis, particularly his continued commitment to being long treasures.
  • CD
    Christopher D.
    10 December 2020 @ 00:24
    Great interview Ed. Brilliant to let someone with such vast experience share his wisdom with only a few pointed questions to make sure able to cover multiple topics.
  • DS
    David S.
    9 December 2020 @ 18:35
    A chasm will be averted only by government aid to businesses and citizens in real need. I wish it were not the case, but I believe it is. I feel enough people will not take the vaccine to control COVID. This means COVID will be causing the economy problems longer than expected. The stock market may simply keep going up with passive investments. Who knows? DLS
  • JM
    John M.
    9 December 2020 @ 18:31
    I am not surprised he continues with his agnostic attitude toward gold...typical economist! FYI, Gold is up almost 80% over the past 5 years.
  • HS
    HANA S.
    9 December 2020 @ 15:28
    looks like Garry does not have the heating on in the house
  • AW
    Andrew W.
    9 December 2020 @ 08:58
    Shilling gets credit for riding the bond bull market the whole way. However, he seems to downplay the significance of CBs and governments deciding that they can monetize as much fiscal spending as they want. For me, Shilling lost his credibility when he was very vocally short equities in Fall 2019 at the same time repo ops started. We never heard much from him thereafter. That probably really hurt. I think he's missing this connection between CB liquidity injection and the market response, which has been analyzed and called well by CrossBorder Capital (Michael J Howell who has been on a few times) which is just more believable.