There are so many scary things about this market. Bond market is more distorted than ever (crappiest companies in the world borrowing money for 6-8%, best ones 0%). Valuations for broad market are high with pockets of pure insanity.
I’m not really a macro guy and I don’t think the right move is to bet on a crash tmrw. But the prudent thing to do right now is to have a plan if we get a real meltdown. Be ready to go on offense if that happens and not defense.
For most people this means buy real estate and things you feel comfortable can hold value or cash flow regardless of the stock market. If I didn’t run a hedge fund I’d be taking money out of the market and buying real estate with predictable cash flows. Lock up low rate LT debt.
If I had to touch stocks I’d go with the big tech monopolies, banks, and more boring stuff that is less rate sensitive (careful in utilities, telecom, and other bond like equities). Maybe some commodity exposure. If we get a big crack you can rotate into riskier stuff.
The risk reward of owning pretty much any bond right now is so bad you really shouldn’t own any of them now. I’d rather be in a checking account. The 60/40 model is busted IMO. If you buy bonds stay really short term.
Crypto is not a hedge against a market crack either IMO. But I would also really derisk there. Most alts are probably worth zero. Stop going leveraged long an insane asset class…
Market was flat from 1999 to 2010 including dividends. It’s not impossible we get an 11 year stretch like that. Plan for the worst and don’t be upset if you miss some upside.
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