Our team has guided a wide range of investment decisions ranging from delivering actionable insights in the moment to hedge funds and family offices along with more strategic initiatives which we’re seeing play out now in a multitude of ways that we’re going to cover in this post.
For rising markets it becomes bleak when uncertain factors come into play – most of which are totally outside of our control (not what top financial institutions are used to) and are driving the markets today. The power of AI and social media are two factors that stand out most.
Looking at the big picture including everything going on now, what are the asset classes that have historically been targeted for safety of principle when a flight of capital to safety is triggered during periods of market calamity? We have a few thoughts on that…
The 10-Year Treasury Bonds/Notes
The 10-YR Note being one of the deepest and most liquid markets in the world has historically been the largest beneficiary of the flight of capital to safety during periods of market turmoil. The 10-YR Note has typically been inversely correlated with equity markets during market panics in the past. Most recently we may have seen a potential breakdown in this inverse correlation.
The Value of Gold: Creating a True Safety Net
There’s a reason why Fort Knox in the United States is one of the most protected locations in the world, and that’s mostly due to a large amount of the gold reserve being stored there, though how does that apply to investors now?
Not only does investing in gold provide a shelter aimed at the preservation of principle but it also provides non-correlated asset diversification to an investment portfolio which showcases the tangible side of investing and why gold, real estate and diversifying across other similar assets is beneficial.
US Dollar: Reserve Currency
The US Dollar is inextricably interconnected to the global financial system primarily because of its coveted reserve currency status. The ability for the US to create almost infinite new money supply by printing dollars and monetizing the debt are great advantages of being the reserve currency. And when investors and speculators unwind positions during periods of market calamity, the beneficiary historically has been the US Dollar.
International Currencies: Japanese Yen and Swiss Franc?
Recently we’ve seen an influx of clients asking questions around diversifying their capital elsewhere from the US Dollar primarily because of concerns over the weakening fiscal picture in America. The Japanese Yen and Swiss Franc, both of which are highly liquid markets, have historically provided some sense of stability during times of crisis though inherently unpredictable from the start.
The moral of the story is that we have a crystal ball which we’re spinning based on the data and the application of our proprietary processes/analysis to better understand what’s around the next turn and it’s exciting to see the feedback we’re getting.
If you’re stuck between a rock and a hard place/investment let’s link up and figure it out.