Basic Points Recommendations

We are recommending a significant reduction in equities, with emphasis on U.S. and emerging markets shares," Mr. Coxe, who runs Coxe Advisors LLP, wrote in his latest Basic Points report. "Runaway bull markets reward strategists who look only one way when they cross one-way streets. We may not see such stock markets again for a long, long time."

Here is a summary of his recommendations:

1. Reduce overall equity exposure, particularly to non-Canadian financial stocks.

2. Maintain commodity-stock weightings in balanced portfolios "because their value proposition is clearer than that of most groups."

3. Hold high exposure to gold and gold stocks as insurance against bad times. "Silver and silver stocks are for those of speculative bent," he adds.

4. Maintain strong weighting in energy stocks, emphasizing oil and coal producers. Canadian oil sands companies are the country's biggest private-sector capital spenders, "and their strategic value to North America is becoming clearer to all but the idiotic."

5. The investment case for agricultural stocks sector is stronger than ever. But: "Underweight exposure to packers and processors, who may have great difficulty in passing along their raw food costs."

6. Canadian bonds are appealing, and the Canadian dollar should hold its own against the greenback.

7. Scale back exposure to Treasurys in favor of quality corporate bonds. "Avoid joining the mad rush to junk bonds." (For a good read on junk bonds, take a look at reporter Simon Avery's The junk bond market: How hot is too hot? and join our live discussion at 11 a.m. How to make bonds a profitable part of your portfolio.)

8. And on LinkedIn's IPO: "When a stock can sell at more than 100 times the company’s revenues, it is a sign that there's too much money around, and speculators are desperate to find something that works."