Financially speaking, Bob Gorman thinks 2012 will be a decent year.
Gorman, co-founder of the TD Family of Mutual Funds who established what is now TD Private Investment Counsel, Canada’s largest manager of private portfolios with $15.2 billion under management, was in Vernon this week to meet with clients.
“My job has two parts – research and develop forecasts for financial markets – then communicate it,” said Gorman, 56, based out of Toronto and frequently called upon by national media for market analysis and commentary.
He commented in 2008, as Canada was in the midst of a recession, that despite all the bad signs, 2009 would be the start of a four-year recovery period. That four-year period ends next year.
“2009 was pretty much what we thought and 2010 was pretty much in line,” said Gorman. “The jury is still out on this year. I think we’ll have a strong close in 2011, so when the dust settles we’ll have had a decent year, not a great year, and next year will be the fourth year of that recovery.”
Gorman makes it clear that Canada is no longer in a recession and concerns the country would realize a “double-dip” recession – that is, there was a recession, we came out of it and then there would be another recession – never materialized.
He does think Canada is in a period of slow growth and adds that the Canadian dollar, which has risen strong against other currencies over the past decade, will weaken just a little.
Gorman said the loonie, over the past 10 years, has been influenced by two major factors: the price of commodities and the U.S. dollar.
When the dollar hit a low of 62 cents US, there was a low ebb for oil and metals. When those commodity prices came back, so did the loonie, hitting a high a couple of years ago of $1.10US. While some people predicted the dollar would go as high as $1.30US, Gorman thought otherwise.
“I didn’t think oil would go that high,” he said. “The dollar has been down to 96, today it’s 99 and change. I think it will probably stay in and around this vicinity.
“I would expect over time the dollar would weaken a little bit. Nothing along the lines we saw before but that would be my instinct.”
As for the U.S. dollar, it’s been weak over the last half-dozen years and that has helped the Canadian dollar become strong. Gorman sees the U.S. dollar strengthening as European currencies start to decline.
“When Euro goes down, the U.S. dollar rises,” he said. “The U.S. dollar, over time, is cyclical. It bottoms out when the U.S. economy is low and in recession. Right now, Americans are coming out of a recession. U.S. interest rates are low and will stay there. I don’t think the U.S. dollar is deteriorating, it’s firming up and that will keep a lid on our currency.”
Asked if Canadian investors should look at the U.S. market now, Gorman said it’s a good time to do so.
“The U.S. stock market has done nothing for a decade and, expressed in Canadian dollars, it’s done worse,” said Gorman. “I think it will do a lot better in the next 10 years. This is probably a good opportunity to look at the U.S., in particular, really big household names who have done nothing for 10 years. A lot of them are fairly inexpensive right now.
“I don’t think it will be as flat as the last 10 years. They’ll probably rise, along with their earnings. And you don’t face the same currency risk as you did, as well.”
Gorman’s Vernon stop was the first in a week-long tour of B.C. meeting with clients and investors.
“With Bob here, having him speak to our clients and employees is something very valuable,” said Ernie Lalonde, senior private banker with TD Waterhouse, who joined Gorman and Doug Brayshaw, TD branch manager, in Vernon.
“Bob comes from a position where he’s working in the industry at a level where he’s garnering information that we don’t always have access to, and brings that down and disseminates it to the group here which is valuable to us and our clients.”
With a lot of clients looking for reassurance as Canada comes out of that four-year recovery period he talked about, Gorman is able to provide comfort at a local level.
“When you speak to someone with the knowledge at Bob’s level, it certainly brings a lot of comfort to them. He’s a lot closer to the fire than we are,” said Lalonde. “He’s great for our clients.”