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.
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.”
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.