Running Money with Charles Heenan, Ep #53

Inflation continues to rise. Interest rates are at 30-year highs. Gold is at all-time highs. There’s geopolitical conflict and confusion everywhere. Yet most global equity markets continue to go up. Where do you turn to get rational analysis, advice, or opinions?

Today’s guest brings three decades of experience to the equation. Charles Heenan is the Co-Investment Director at Kennox Asset Management. He’s adopted a distinct value approach to global investing over the last 30 years. He shares some insight into global investing (and why it’s important to diversify internationally) in this episode of UPThinking Finance™!

================================

LISTEN IF YOU ARE INTERESTED IN…

[2:27] Learn more about Charles’ equity firm: Kennox
[9:07] How things have evolved since the 90s
[12:13] A perspective from the other side of the ocean
[15:23] The impact of global debt on global economies
[20:59] Diversification and trusting the process
[25:55] The Kennox approach to global investing
[31:32] Many investments require patience
[40:43] How Kennox conducts global research
[43:25] How instinct plays a role in decision-making

A perspective from the other side of the ocean

How did the US become 70% of global markets? From an American’s point of view, why would you look outside of the US? The stock market has done incredibly well.

Charles firmly believes that you can't have all of your investments pointed in one direction. Just as you diversify your portfolio domestically, you need to diversify internationally. North Americans should challenge themselves.

While we realize that investing in US assets has been amazing, we have to focus on what will perform in the next decade. Charles sees great opportunities outside the US.

The impact of global debt on global economies

Charles believes that interest rates might be the most important number to track in the world economy. They were just cranked and left alone for a decade. If Edward Chancellor is right, we may run into real problems. That’s why he emphasizes that you should get some things in your portfolio that will do well, even if global debt becomes a problem.

Charles doesn’t worry about a financial crisis because of the way his firm thinks about risk. They prepare and keep well-positioned for if and when things happen. Likewise, we preach risk management all the time. The reality is that retired people with a 60/40 portfolio still haven’t recovered from 2022 and it’s because they relied too heavily on the old way of doing things.

The Kennox approach to global investing

Kennox hunts the whole world because they truly want to find the best company in the world—at a rock-bottom price. Every efficient market hypothesis person will tell you it’s impossible. And while it’s rare, it does happen. Global investing gives them the biggest opportunity to find what they’re looking for.

They own a small company that manufactures high-end designer shoes. Their stock had cash on the balance sheet and had a 12% dividend yield every year. It was a great company making great margins without leverage problems. It took the market 18 months to care.

There are small opportunities that exist everywhere but you have to be willing to look outside the American box. They’re finding more opportunities in Europe and Asia far more than in the US. They only buy the highest quality. Most of their investments have no debt, are all profitable, and are all paying dividends.

They spent five years going sideways when everyone else in the world made out like bandits. But they made more money in the first few months of 2022 than any other year in the 17 years they’d been operating—in a year the markets were getting hammered. It was because they suffered through five years of pain. It left large opportunities available.

They buy them, stick with them, and track what they do over 10–20 years. The most important thing they embrace is long timeframes. You have to be able to interpret the available information and the conviction to stick with your decisions. That’s what makes it work.

Charles Heenan is not affiliated with or endorsed by LPL Financial or Capital Investment Advisers.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

The financial professionals associated with LPL Financial may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.

================================

RESOURCES MENTIONED

The Price of Time: The Real Story of Interest by Edward Chancellor: https://www.amazon.com/Price-Time-Real-Story-Interest/dp/0802160069

=================================

CONNECT WITH CHARLES HEENAN

https://kennox.co.uk/

=============================

CONNECT WITH EMERSON:

Website: www.CIAdvisers.com