Major investments that have passed my diversification test

One of the busiest transactions at the moment is the “fourth quarter crash” transaction.many Investor I’m worried about galloping inflation — in my view it’s probably not as bad as some might think. But definitely, the larger group U.S. stock market, I can’t seem to derail anything yet.

Delta variant? Don’t worry. Just buy tech stocks. Will Sino-US relations slip? No problem. Just buy US growth stocks. Evaluation using the traditional method of passing through the roof? Stay calm and think about the US earnings boom. Optimists may turn out to be right, but market volatility is more likely to bounce up, and in my view it’s even worse. China crackdown About real estate developers and technology.

Wise investors look to diversification. But in a globalized market where everything seems to be correlated, including much of the bond market, it’s hard to break.

I was pondering this and came up with a candidate list of ideas that could be implemented using accessible funds and stocks. Importantly, most of the proposals I hold have provided the right kind of diversification over the last few years.

Just because it’s a terrible investment, it’s easy for the investment to generate diverse and uncorrelated returns. In other words, these are heading in the opposite direction, while all other values ​​are rising. Hopefully most of these options will pass the test.

There are two “buckets” in the idea. The first is an interesting option driven by forces that are not necessarily related to the ups and downs of the business cycle. One is the opportunity in the nuclear industry and the difficulty of accessing the uranium supply. Prices have skyrocketed since I last wrote about this, but I think the opportunity is still huge — and almost completely unrelated to stock market turnover.In my view, the easiest way to do this is via the physical uranium owners listed in Aim. Yellowcake..

The following is the price of carbon emissions through a new exchange-traded fund (ETF) from Wisdom Tree.It tracks the price of carbon through EU emissions trading scheme.. This price will be increasingly affected by policy decisions on emission targets and growing economic interest in estimating carbon prices. My goal is a price of 100 euros per ton within a few years.

Listed hedge fund BH Macro (now incorporating its former sister fund BH Global) is investing in a variety of long, short and macro strategies run by Brevan Howard, a well-established player in the field. Its record in the era of market volatility is excellent, but it has also been able to generate positive returns in more bullish markets.

By the way, if you’re looking for an easy way to make money during times of high market volatility, invest in groups like CMC Markets and Plus500 that make big profits from speculative day traders using spread betting platforms. Would you like to try it? Both are very profitable in peacetime, but when extreme volatility hits the market, profits skyrocket.

The following three diversifications are very traditional and need little explanation. Long-term US Treasuries, with a yield of 1.32%, seem to me a reasonable safe haven asset. Another classic diversification factor is the yen accessed through the Wisdom Tree Fund. This is a currency tracker with a long Japanese Yen and a short British Pound.

Unlike almost every idea in this table, this is a classic “if everything else goes wrong” safe haven asset and hasn’t really made much money in the last few years. Money wall towards the yen.

My penultimate suggestion isn’t the most amazing of all. It’s physical gold. There are a variety of options, including direct online ownership through costumes such as ETC and BullionVault, and various app-based products such as Glint and Tally. Given the current geopolitical challenges, investing in Chinese local currency bonds is a very adventurous idea. However, RMB-denominated bonds are one of the few sovereigns that offer positive real returns from currencies that are slowly rising over time.

My second idea basket is more traditional, but consists of stocks that may offer diversified investments. Perhaps the most speculative are Russian stocks through the JP Morgan Fund, which is listed on the London market. Russia’s economy is more isolated than ever, with a reputation for strong financial conditions, large central bank reserves, and maverick thinking.

No stock is as defensive as tobacco stocks, such as British American Tobacco (BAT). Today, all mega-tobacco companies are government-regulated money-making machines and are shunned by many investors, especially those who are ESG-minded. Still, when it comes to classic fundamentals, with the exception of some big pharmaceutical stocks, nothing can completely beat them.

Healthcare is easily accessible through Polar Capital listed funds (Healthcare and Income Trust). The fund has a cautious mission to invest in large, solid, income-generating stocks. I think this healthcare fund is likely to be a bit more volatile than tobacco stocks, but I think it’s unlikely that a sudden stock market panic will lose the driving force for long-term demand.

The first bucket of choice also has one very speculative idea. KR1.. I have carefully avoided mentioning Bitcoin and crypto-related issues. I’m not sure these digital currencies will thrive in times of intense market turmoil. For me, they have replaced meme stocks and tech growth stocks.

If I’m wrong, crypto will crash and boom. But that boom will also benefit the world in the early stages of decentralized finance. This is the focus of listed crypto venture capitalist KR1 and is essentially a leverage play where crypto becomes even more mainstream in the wake of a market crash. Never recommended for defensive investors. But as an alternative diversifier “there”, it’s worth a look for truly adventurous people.

David Stephenson is an active retail investor. Among the securities mentioned, he is interested in Yellowcake, ETFS Carbon, BH Macro, KR1 and owns physical gold. Email: adventurous@.. twitter: @advinvestor

Major investments that have passed my diversification test

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