These are unprecedented and
perplexingly strange times for all of us as we cautiously adapt to the
onslaught of Covid-19. The financial markets saw a spike in volatility at the
onset, which has seemed to taper since. The Federal Reserve slashed interest rates
before their scheduled meeting last month and due to supply chain concerns
numerous companies have wholly revised their earnings outlooks for the
future.
As we shelter in place,
trying to minimize the tidal reach of this viral flood, many people feel forced
in front of the television (and the corona-crazy news cycle) for too many hours
in the day. With so many headlines coursing, our nerves undoubtedly can get the
better of us. In these tense moments, it is only natural to re-assess personal
investment strategies in an attempt to save what little funds are left.
So, I asked Ryan Brucato, the expert investment professional and founder of both RB Milestone Group and EMBR Capital, his intensely successful single-member venture capital
fund… a few questions.
If you do not remember the
name Ryan Brucato, understandable perhaps, but my recent research very
clearly recalls an interview Brucato gave from 2012 with Investing News Network
alongside then Chief Investment Strategist of JP Morgan Asset Management
Rebecca Patterson. In the interview, a young and intuitive Ryan Brucato
correctly predicts the eventual surge in lithium demand through the year, you
guessed it, 2020.
“…on the demand side, we
can expect significant traction for lithium demand driven by increasing
production of electric vehicles. China plans to make a million electric
vehicles annually by 2015, five million by 2020. In the short run the big
producers have enough resources and capability to meet the demand. However,
in the long run [lithium] prices may rise in response to increased demand. The
biggest beneficiary will be electric vehicle grade lithium producers. For the
marginal explorer, cost of production will be critical.”
-Ryan Brucato, from the 2012 Lithium Market Outlook on Investing News Network
Below,
a seasoned Ryan Brucato gives you his take on investing in these unprecedented
times and how this could be the moment for smart investors to ‘pick their spots
for the long-term.’
Learn
more about your investing future from the interview below as financial herald
Ryan Brucato puts together a few words to calm and make sense of the rocky
corona-laced terrain that the everyday investor like you and me must maneuver
through now and into the future.
Will the COVID-19 impact lead to a global recession?
Yes. At this point,
the consensus is that a global recession is inevitable. In fact, we are already
likely in a recession which will be confirmed formally in the coming months.
The question now is: how long will the economic recovery take?
How worried should we be about corporate or consumer debt causing a
wide impact on the nature of investing in America? Have you already felt that
impact and how?
Corporate and
consumer debt is absolutely something that economists, CEOs, portfolio managers
and policy makers will need to keep a close on eye on moving forward. In the
current environment, debt is buying corporates and consumers time to weather
the storm. The question is: at what cost? From a corporate valuation
perspective, many companies have experienced significant decreases in
underlying share prices. Therefore, many companies are taking the view that it
could be advantageous to bolt-on short term corporate debt in an attempt to
avoid equity dilution. However, in this environment high-yield corporate debt
instruments could be toxic as the probability of loan defaults typically
increase in lockstep with higher interest rate obligations. Standstill operations
will make it even harder to fulfill loan obligations as well. At the end of the
day, loans are temporary solutions that will need to be remunerated with
corporate cash flows. That said, stimulus-imposed loan instruments that offer a
loan forgiveness covenant, such as the Paycheck Protection Program (PPP), is
very attractive and should be the first place that small businesses seek
temporary corporate refuge.
Which market sectors will see/are seeing less volatility? Why?
Volatility is
changing by the day, but historically safe-haven investments such as precious
metals and FX offer relatively less volatility exposure in this type of
environment.
What are the biggest changes that will need to be made in investing
strategy to come out a winner after Covid-19?
COVID-19 has
changed the way we function as a society, which could have lasting effects
after the pandemic has dissipated. Finding opportunities that have strong core
fundamentals that can also flourish in a remote setting present a seemingly
de-risked value proposition.
What kind of impact with the government’s fiscal stimulus has on
American investing? How Will it affect your business?
Stimulus-imposed
loan instruments that offer a loan forgiveness covenant, such as the Payroll
Protection Programs (PPP), is very attractive and should be the first place
that small businesses seek temporary corporate refuge.
How can investors make money during COVID-19?
Some sectors that
have captured consumer (and investor) appeal include: online education,
consumer software, home/streaming entertainment, and PPE services.
When can you expect markets will normalize? Why?
Stock markets have
experienced a healthy bounce from the March lows. Ironically, economic data
continues to manifest a more seemingly gloomy picture. As corporate operations
normalize in the coming months, improved economic data will follow. The
consensus is that economic progress will return in H2.
What advice would you give to all investors right now?
Recessions are
cyclical and while it is natural to feel worried about depleting 401k, 529 and
brokerage account balances, this is when players pick their spots for the
long-term. Weigh the data and don’t get emotional.
About Ryan Brucato
Ryan Brucato’s background is largely entrepreneurial. In early 2009, he founded the corporate communications and management consulting firm, RB Milestone Group LLC, and currently sits on its Advisory Board. He has been responsible for starting numerous private ventures throughout his career and has advised hundreds of public and private companies globally. He has a deep-rooted proficiency in international trade, corporate finance and M&A.
In 2012, Mr. Brucato founded what is now EMBR Capital LLC, a single-member family office and venture capital fund based in Greenwich, CT, USA. EMBR partners with exceptional founders and management teams with unique insights, through all phases of growth. Mr. Brucato has a passion for international business and aligns much of EMBR’s fund allocations with entrepreneurs and management teams that echo the same mindset.
Since 2017, he has completed over 80 EMBR investments into over 50 companies that operate on 6 continents. Mr. Brucato has directed much of EMBR’s investments into companies focused on: cannabis; diversified natural resources; healthcare; renewable energy; technology and telecommunications. He is also dedicated to funding socially and environmentally impactful businesses worldwide. Over the years, he has been noted in many leading publications, including: Fox Business, Gold & Minerals Gazette, Bloomberg, HazMat Magazine, Resource Investing News, The Financial Review and BusinessWeek. Mr. Brucato resides in Greenwich, CT with his wife and two sons. He enjoys spending time with family, regularly attending local CrossFit classes, participating in triathlons and skiing.
About
EMBR Capital LLC
EMBR Capital LLC (“EMBR”), is a single-member family office and venture capital fund based in Greenwich, CT, USA. EMBR partners with exceptional founders and management teams with unique insights, through all phases of growth. Mr. Brucato has a passion for international business and aligns much of EMBR’s fund allocations with entrepreneurs and management teams that echo the same mindset.
Since 2017, EMBR has completed over 80 investments into over 50 companies that operate on 6 continents. EMBR has directed much of its investments into companies focused on cannabis; diversified natural resources; healthcare; renewable energy; technology; and telecommunications. EMBR is also dedicated to funding socially and environmentally impactful businesses worldwide.
About RB Milestone
Group LLC
In 2009, Mr. Brucato founded RB Milestone Group LLC (“RBMG”). RBMG is a boutique corporate communications and management consulting firm that is based in the United States, with offices in Stamford and NYC. Mr. Brucato currently serves as an Advisory Board member for the firm. RBMG advises emerging cross-border clients who are publicly traded on the TSX, TSXV, CSE, ASX and AIM. RBMG refines communications strategies, weighs data and advises clients on how to penetrate new markets.
They help clients target and secure relationships with niche US stakeholders and key industry strategics globally. RBMG partners with clients across a wide range of industry segments, including: cannabis; cleantech; consumer goods; crypto; fintech; healthcare; metals & mining; professional services; renewable energy; and technology. RBMG was recognized by O’Dwyers as being one of America’s top 12 IR firms of 2020.
SME Paid Under
