What should you own now?
The year is soon over and most portfolios have rushed upwards. As of today (December 13), OMXSPI is up 28 percent year to date, and the gold price is up by 21 percent in SEK. Has your portfolio just kept up and how do you plan to position yourself before the end of the year, the start of the year and next year, to achieve the highest possible return with the least effort and mental pressure?
What should you own now?
The year is soon over and most portfolios have rushed upwards. As of today (December 13),
OMXSPI is up 28 percent year to date, and the gold price is up by 21 percent in SEK. Has your
portfolio just kept up and how do you plan to position yourself before the end of the year, the
start of the year and next year, to achieve the highest possible return with the least effort and
mental pressure?
Have you considered that it is also a new decade? One of the world's most important investors
of all time, Ray Dalio, has. His conclusion is that the 2020s will be the age of gold, but that
stocks do not have to perform too badly either, but that you can expect high volatility and that
the right selection of shares becomes more important than in the 2010s.
The recent decade (2010’s) really was the decade of equities (OMXSPI +156 percent) as the
central banks did just about anything to protect shareholders from financial crises and a weak
economy. As a side effect, gold also performed well in the 2010s (the "brick" returned half as
much as shares, but still 73 percent). This can be compared to how things were the decade
before when the total return for stocks was minus 8%)
The question is what strategy you should have in the future. Should you have the most precious
metals, stocks, government bonds, USD, EUR, Bitcoin, Ether, agricultural commodities, hedge
funds or anything else? Which combinations are best and should you go short on some assets
or shares or just keep away what is the highest risk?
Gold has thus produced a perfectly okay return over the past ten years, despite the focus on
equities and that gold has been in a negative trend since the peak of 2011. The gold buyers
simply withdrew a little too much in advance during the 00s, since they were already then saw
clear signs that central banks were releasing the latches completely. Ray Dalio and several
other super administrators believe it is time for step two in the 20th century. Then gold again
comes into focus, while shares lose ground because weak development for the economy and
corporate profits does not provide sufficient support for higher stock prices. At the same time,
accelerating stimulus drives up the price even more on real assets such as gold and agricultural
commodities.
These thoughts can be good to carry with you as you formulate your overall strategy for the
coming decade and provide some guidance for your tactical repositioning once a year. But how
are you going to act in the middle of December 2019? After all, the most likely thing is that the
status quo prevails, ie that old trends and behaviors exist.
In light of this, private investors tend to be able to take advantage of seasonal effects such as
clearing out the loser of the year from the portfolio and instead hooking on and buying this
year's winners to keep them over the turn of the year. After the turn of the year there are two
possibilities, among other things. One is to focus the portfolio on the increasingly narrow group
of stock market executives who are still “working” (ie have risen lately).
And another, more defensive, is to buy the "dogs", the companies with the highest direct return
after the turn of the year. The latter, in practice, means buying companies that investors have
lost confidence in but who are still expected to retain the dividend. NOTE! That you should do
your own analysis of the actual dividend capacity and thus not just filter out official forecasts for
the dividends, because then it can go as bad as for a placement in eg Swedbank 2019.
If you expect the previous ten years to be a good guide for the next ten, you should continue to
own shares. And then with continued focus on technology, including semiconductors like
Broadcom and biotech companies, as well as social media, perhaps including entertainment like
Netflix and Disney, but also with an eye on financial startups and credit companies.
MarketAxess, Amex, VISA and MasterCard have ten really good years behind them. But if you
think that soon enough will be enough, and that continued monetary stimulus and alleged
solutions to the US-China trade conflict are not enough, then you must dare to do the opposite.
Maybe you should just start by hedging the stock index downside. But maybe you should also
consider moving significantly from stocks and to real things like gold and cotton, or at least
cheap, smaller, forgotten, unindexed small stocks.
Risks
This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.
The products are not capital protected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.