Amid an escalating trade conflict, John De Goey is warning against naivety
Throughout his career, John De Goey has avoided promising the world to his clients, instead providing safe, steady options that gel with market circumstances. But he has long expressed his frustration at what he views as the industry’s tendency to over-glamourize outlooks.
“I'm a realist and I believe people need to see things as they are, not as they hope they would be or as they would wish them to be,” he said.
Upon entering the financial services industry in the early 1990s, De Goey found himself frustrated with what he saw as unrealistic targets presented to clients. He has packed his bags over a lack of cohesion with employers a number of times but feels he has finally found a home at Designed Wealth Management, a firm he says has allowed him to thrive with full independence.
And with today’s market filled with uncertainty and volatility, De Goey is not sugarcoating his predictions for the next remaining four years of US President Donald Trump’s term.
“My view is that this time is different and the reason this time is different with regard to the investing environment is that we have never in all of recorded history had a convicted felon running the largest economy in the world,” he said. “There is no precedent for it whatsoever.”
De Goey predicts there is an “80 per cent” chance of a recession occurring in Canada right now and in the near future, even if Trump were to cancel all tariffs today. He said the delayed reporting of Canada’s quarterly economic outlook allows advisors to maintain an over-optimistic “wait and see” attitude towards the market.
“That's part of my concern is that the industry doesn't say, there's a reasonably good chance that we're in a recession already,” he said. “Instead, they talk about a recession that is coming. No, the recession is already here, it's just going to take five months before we can verify that it was here already in March.”
During this period of chaos, De Goey has advised clients to lower stocks in general, but particularly North American ones, while finding alternatives in hard assets like real estate, infrastructure and gold. While this advice might not see the wild returns on investment some clients may be expecting, he promotes their ability to remain robust in challenging circumstances.
A particular concern for De Goey is the impacts of optimism bias on retired clients living off a fixed income. He said they are usually not equipped to spend their way out of a storm, though advisors often nudge them towards retaining risky investments.
“Don't tell someone to take a long-term view when they're in their 60s and retired,” he said. “That person might live another 20 or even 30 years, but they don't have the capacity to replenish their nest egg. Whatever they have is what they have and at that point you have to win by not losing.”
However, De Goey argues that he is indeed an optimist, just one who retains realistic expectations, which lead to wise financial decisions.
Optimism bias is the focus of De Goey’s 2023 book Bullshift, where he argues advisors and investors often suffer from the belief that they are immune to any negative shifts in the market. Bullshift is De Goey’s third book about financial advising, while has also begun a podcast on the subject. He describes the industry as young and teething, with a need to have better understanding between advisors and investors for the industry to thrive.
