A cura di Walter Snyder, WWS Swiss Financial Consulting SA
Complacency is not a winning characteristic of an investor. Several investors became complacent in 2017 because volatility was so low and had been low for a long time. Volatility lows hit records. It was therefore a real shock when February turned out to be a bad month for stocks. Animal spirits recovered and pushed the S&P to new records only to finish in a muddy October that brought the markets back to where they had been months before. Last week`s rally failed to hold, and investment advisors are holding their breath to see what is going to happen next.
So volatility is back, almost to normal, at the same time that the Fed is bent on “normalizing” interest rates and reducing the bloated balance sheet that QE brought about. It is symptomatic that there has been a lot of noise recently about rising and falling bond yields with pundits following every rise and fall in the bond market. The yield curve is under constant surveillance and a steepening yield curve or a flattening yield curve torments the hustlers on Wall Street and intimidates the managers of bank funds that fear their clients may not approve of their investment strategy in a changing market environment.
What has unnerved many is that FANG stocks have not continued their upward trek. Because the market is so heavily influenced by a small number of stocks, any tremor is felt far and wide, frightening the denizens of the caves of Manhattan. Some go even so far as to remind investors that the Fed is still intent on raising interest rates, which bodes ill for equities despite those that claim that both stocks and bonds can go northwards simultaneously.
This Newsletter sticks to its defensive and conservative position. Value stocks are going to produce better results in the long run. When growth stocks are racing upwards, it can be profitable to go along with the crowd, but be ready to take profits when the taking is good. Gold is still holding value even if the market is manipulated. Commodities have suffered, but some hold promise for future gains, particularly uranium.
Carefully chosen real estate is usually a good investment. With all the uncertainty reigning in the markets with the oil price slipping, alternative investments, for example, classic cars that were mentioned last week, promote diversification. Investment in art is also another sector that can produce good results. Financial advisors that insist on staying with bank products relying on underlying derivative trades do not always give good advice.