Daniel Gladiš: We see the most opportunities in North America, where one undervalued oil producer has caught our eye
Last week, the focus was primarily on the Federal Reserve, which raised interest rates again by 75 basis points. The current inflationary environment perhaps knows no end in the eyes of investors, which also looks like a possible scenario for at least the next few months. To analyse this topic, i.e. the next outlook, the opportunities on the stock market and where to park your money at this time, I approached well-known Czech investor Daniel Gladiš.
Daniel Gladiš
Who is Daniel Gladiš?
Daniel Gladiš is the co-founder of the investment fund Vltava Fund, which he founded in 2004, where he is still a director. Vltava Fund is a value-oriented investment fund of qualified investors. Daniel Gladiš is (among others) also the author of interesting books on investing (for example - Learn to Invest and Stock Investing).
Over the course of this year, I have often wondered when investors in our community actually started investing. Overwhelmingly, it turns out that we have an enormous number of newbies and investors who have only recently started investing (let's say it's between a few months and a few years). For many of these, it's definitely a very bad time to start as no scholar has fallen from the sky and in many cases they started investing at the peak during the covid era or this year when stock markets are universally down. So my first question is directed at this category of investors who are experiencing their first difficult period and seeing losses in their portfolio.
What would you recommend these investors do in this difficult period? Do you have any specific advice?
If they want to continue investing, then it's good not to get discouraged. No one learned from heaven and every setback can be used to move forward. On the other hand, it is good to remember that the stock market is not a place where one can get rich easily and without work. It is a place where one can invest money in shares in individual companies over the long term and benefit from the results of their business. So I would recommend reading first, then thinking a lot about it, and only then investing. Proceed slowly, only get into things you feel you understand and consistently make sure that what you pay (price) is much less than what you get back (value).
With that said, another question also comes to mind - In the current period, where would you recommend newbies or just regular people who don't want to have their money eaten up by inflation in their bank account keep their money?
The environment we live in and probably will live in for a long time, an environment of negative real rates, basically excludes both cash and debt assets from the appropriate range of investments. Investments should therefore be directed primarily into equity assets (shares in companies, real estate). There is a better chance that the return on these investments will compensate for the loss in the value of money caused by inflation.
A few days ago we were presented with the latest data regarding the US PPI and CPI, which was certainly nothing to cheer about. Everyone is currently addressing the question: When will the Fed be able to get inflation under control and with it, what we might expect for the rest of the year in the stock markets? We have a myriad of information and opinion circulating where many economists and analysts basically can't agree on the next outlook, of course I understand that, but many opinions are divergent to the extreme. For example, for the S&P500 index, Bank of America sees values of around 3 600 points at the end of the year, while JPMorgan, for example, predicts values of around 4 800 points. That is an incredibly large difference. Which scenario are you more inclined towards?
I don't have an opinion on the stock markets for the rest of the year, nor do I spend time trying to make one. When choosing investments, I try to look far beyond the horizon of current events, the significance of which thus plays only a marginal role in my considerations.
Where do you currently see the biggest opportunities in terms of investment (America, Europe, China)? Could you also tell us where you currently perceive the least risk? If one does a quick review of what's currently happening in the US, Europe and China, it doesn't seem like an ideal environment, especially if I again direct this at the novice investor who may be very concerned when looking at inflation, the energy crisis, property markets and a number of other events.
The long-term winners will be those countries (and companies) that have access to cheap energy. That's why we have the majority of our portfolio in North America, and that's also where we see the most opportunity. But there is also a lot in the UK, for example, and the Japanese market as a whole is also cheap.
Source.
Finally, I'd like to ask you about what stocks (if any) you have recently included in your portfolio (+reasons that led you to do so)?
Cenovus Energy $CVE-0.2% was the last stock we added to the portfolio during this year. This is one of the largest oil producers in Canada and in our view the market is underestimating how high oil prices will go in the long term. This makes Cenovus stock very attractive in our eyes.
Conclusion
I am glad that Mr. Gladish took the time to give me his opinions as this is another investor that I respect and I also remember when I was just reading his books on investing in my early days. I like the fact that he acknowledges the tried and tested classics, i.e. that an investor must not be discouraged and must also pay attention to education, which is essential before the final point, i.e. the final investment. I was quite surprised by the focus and vision of investment opportunities in the UK, where I have not personally invested before.
Top insights:
- Move slowly, only get into things you feel you understand and consistently ensure that what you pay (price) is much less than what you get back (value).
- The long-term winners will be those countries (and companies) that have access to cheap energy.
- In our view, the market is undervaluing Cenovus Energy, one of Canada's largest oil producers.
For more such interesting articles and information, keep an eye on Bulios and, of course, Daniel Gladish, who contributed his perspective.
Please note that this is not financial advice. Every investment must go through a thorough analysis.
