PROVEN and clients talk recession proofing

PROVEN and clients talk recession proofing

Wednesday, December 11, 2019

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PROVEN Wealth at its recently held cocktails and conversation series titled 'Cheers to your Wealth' feted and engaged clients. The event hosted meaningful conversions about wealth creation, factoring also discussions about the likely impacts from a global recession or economic turndown and how to proof businesses.

At the company's signature event first rolled out in Montego Bay, clients joined the PROVEN team and renowned guest speaker Gregory Fisher, managing director of Jeffries Group, who spoke on the signs of a pending recession in the US and how to protect investments from a recession, under the theme: 'Creating a Recession-Proof Portfolio'.

Additionally, PROVEN Wealth's president and chief executive officer (CEO), Johann Heaven, also addressed the audience on the possible repercussions to the local economy in the event of a Brexit or a recession in the United States.

“While Jamaica is in a much better position than it was 10 years ago during the last recession, the country's economy is likely to feel some impact as we are in a very open society and dependent on our trading partners, so in the event of a recession, our tourism, which now accounts for nine per cent of our gross domestic product (GDP), would be a first point of impact. Secondly, remittances will reduce if the US falls into a recession. We are already under pressure with bauxite prices at all-time lows and the closure of JISCO-Alpart plant will have a further drag on our GDP,” he explained.

Heaven also alluded to other areas which could be affected in the event of a global slowdown. These include: Foreign Direct Investment (FDI); International Monetary Fund (IMF) revised global GDP growth projection from 3.5 per cent to 3.3 per cent; and the Jamaica Stock Exchange, which is at an all-time high; along with interest rates. He cast some positives for the outlook for our economy not being all downhill as he made a comparison between the economy during global recession in 2008 and its current state, according to a news release.

“Jamaica's economic situation was quite different, with the spiralling fiscal deficit, unsustainable debt levels, rising interest rates, plummeting global bonds prices, negative economic growth, and poor ratings. Since then, we have had two debt exchanges, our interest costs have been reduced considerably, maturity on our bonds has been extended, there have been two successful IMF programmes, and the Government of Jamaica has been very proactive with their liability management,” he further emphasised.

Fisher also added to that discussion by urging seasoned investors to protect their investment by seeking VAARP- — value at a reasonable price.

“We must look at every asset class (stocks, bonds, real estate, etc) and assess the value versus what people normally buy-growth stocks for. In anticipation of a potential meltdown in 2020-2021, we must switch our methodology, look to stocks for dividend payments and bonds for capital gains. Lastly, never be afraid to take capital gains when available,” he said.

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