Economist Gary Shilling is so bearish on the global economy, it’s hard to find anything he likes.
Earlier we published his list of really bad investments, including the housing market, banks, commodities, emerging markets and debt-burdened countries like Japan.
But there’s a short list of favourite investments in his new book The Age Of Deleveraging.
Shilling says he has been a 30-year Treasury bull since 1981. The 'bond rally of a lifetime' is going to continue as deleveraging causes deflation. Even Ben Bernanke won't be able to stop that.
There won't be much growth, so you might as well collect dividends. A few examples include Procter and Gamble (PG), Unilever (UN), Coca Cola (KO) and PepsiCo (PEP).
Consumer discretionary spending is getting whacked, but people still need to buy bread and socks. Stores like Walmart are well-positioned to grow.
People want to spend money on something. Shilling says items like snakeskin tote bags, five-blade razors and designer jeans could be the new type of conspicuous consumption, taking the place of big ticket items like sports cars.
With Europe and Japan drowning in debt and emerging markets verging on a crash, the dollar is going to start looking pretty good. Shilling says the dollar will remain the world's currency, with no real competition from gold or the yuan.
Meanwhile, America will be mired in deflation.
Low investment returns will discourage day-traders and encourage the use of professionals.
Cheap small homes are the order of the day, as old people look for a cheap retirement spot and young people look for a small mortgage.
Renting will be a more and more popular strategy.
As America ages, the health care industry seems unstoppable. Even Obama's health care reform ended up boosting earnings for many companies.
Anything that helps juice bottom lines will do well in the new era. This includes consulting groups, computers, internet, biotech and telecom.