CONSUELO MACK: This week on WEALTHTRACK, swimming against the tide with deep value investor Robert Kleinschmidt. The Tocqueville Fund’s long time portfolio manager finds his best investments in rough seas others flee. His contrarian ideas are next, exclusively on Consuelo Mack WEALTHTRACK.
Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack.
U.S. bears are coming out of hibernation. Despite the fact that the U.S. economy is still chugging along, “slow but solid” as exclusive WEALTHTRACK guest Ed Hyman described it a few weeks ago, the markets are showing increasing signs of stress.
According to this week’s guest the signals have been there for months. Contrarian value investor Robert Kleinschmidt has been tracking what he considered to be an unsustainable divergence between the global decline in commodity prices, which signal economic slowdown and world stock market behavior.
Kleinschmidt notes that in the U.S., the majority of stocks in the S&P 500 are already in a bear market, having declined more than 20% from their recent highs. Were it not for large market cap stocks like McDonalds, AT&T and Google parent, Alphabet, the damage in the index itself would be far greater. It already is in many overseas markets. According to a recent count by Bank of America Merrill Lynch at least 33 out of 45 major country stock indexes are in bear territory.
These conditions mean more opportunity for this week’s exclusive guest. Robert Kleinschmidt is the President and Chief Investment Officer of Tocqueville Asset Management, a value oriented wealth management firm devoted to capital preservation for its global high net worth clients and institutions. A small portion of its $11 billion in assets are in its Tocqueville mutual fund which Kleinschmidt has been managing since January of 1992. The fund has delivered average annualized returns of nearly 10% since then, beating the S&P 500 in the process. However it has lagged the market in recent years. I began the interview by asking Kleinschmidt why commodity prices, above all other indicators are key to understanding the global economy and markets.