At challenging times like these, I like to stroll down the hall to my old office and seek a private audience with its new inhabitant, Jack Rivkin. He succeeded me as chief executive officer at Altegris in 2015 (I’m still chairman), and he also heads our investment team.
Maybe you have seen him on Bloomberg News or CNBC. Financial reporters love Jack. He has a knack for taming unruly economic data and for the quotable quote, like the time someone asked him what makes a good money manager and he shot back, “Introspection and paranoia.” That’s pure Jack.
Jack has had a storied career in the investment business, holding senior positions with Neuberger Berman, Citigroup Investments and Paine Webber, among others. His managerial achievements are featured in one of Harvard Business School’s most popular case studies.
So at times like these, when Third Avenue Focused Credit Fund halts redemptions — a mutual fund, for heaven’s sake — when pollution in Beijing forces a partial shutdown of the world’s 10th largest city, when oil dips to 2004 prices, it’s time to ask Jack what’s going on. Here is a sampling of his predictions for 2016.
1. Investment Opportunities
Active management, confined to North and South America, could produce as good a set of returns in 2016 as a more diversified portfolio in Jack’s view. First, dispersion is returning to U.S. equities. As of late December, half of the stocks in the S&P 500 index had risen 18% and half had fallen 18%, according to Jack. It’s looking more and more like a stock picker’s market. That may apply to Canada, too, if problems in the energy sector continue and spread to its housing and banking sectors.
While Brazil and Venezuela are both mired in deep depressions, Argentina may present dispersed opportunities. The November 2015 election of Mauricio Macri should help Argentina regain access to international capital markets. Moody’s still rates its debt CAA 1, which means its bonds are of “poor standing and subject to very high credit risk,” but that could change if Macri succeeds in jump starting the economy and justifies Argentinians’ newfound optimism.