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Forget Trump Tweets: Two of the Biggest Risks the Markets Face in 2019

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As trade tensions come to bear and the market focuses in on China with a laser focus, investors are best served to take a look at the broader picture, which may have less observed risks remaining.

"Great job growth, wage growth, corporate earnings are strong, interest rates are reasonable and inflation is in check," Michael Cuggino, President and Portfolio Manager of the Permanent Portfolio Family of Funds said, highlighting the positives. "You generally don't see recession start with that fact pattern yet there are a lot of risks swirling about global growth, geopolitical issues, trade issues, tariff issues, any one of which could be the domino that changes and these things can change quickly."

As such, he advised that investors remain diversified and monitor the situation so as not to be unduly impacted by the headline-grabbing risks.

"We take a long-term view so I wouldn't take, pay too much attention to the tweets [from President Trump]," he said. "I would counsel investors, unless you're a trader, which you can make money with these big volatility swing, I would stay the course."

However, Cuggino zeroed in on another frothy aspect of the market that reminds him of previous bubbles that burst years ago.

"The IPO calendar this year reminds me quite a bit of 1999 where you've got a lot of companies coming public, any of them have less than stellar operating results but, but maybe great stories in the long term, we just don't know," he told TheStreet.

He added that the possibility of a changing macroeconomic landscape in terms of trade, late cycle U.S. growth, and interest rate changes, along with the added scrutiny of public markets make each of these companies difficult investment cases at present.

"Certainly there's been some success stories in the IPO market this year Beyond Meat (BYND) being one of them, Pinterest (PINS) ," he added. "These are disruptive companies and we would take a long-term view on them. We don't know how these business plans are going to pan out in the long term at the moment."

In that context, path to profitability is key and explains the share reaction seen with heavy-loss incurring companies like Lyft (LYFT) and Uber (UBER)

"We generally don't invest in companies where we can't see a path to profitability," Cuggino explained. "I think there's generally in some of these companies, a much more risky path to profitability, or at least an uncertain one, that makes it as an investment for a long term investor like us a little bit difficult to swallow."

To hear Cuggino's full thoughts on these two risks that are drawing much of the market's attention at present, check out the video above.

Related. 3 Consumer Staples Stocks for a Volatile Market

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