A trusted partner, someone I have worked with for over 20 years and who has been as steady as a Swiss watch recently shared an update from Mark Haefele of UBS Global Wealth Management always a rational voice amid the noise of global markets. A worthwhile read for any serious investors looking to navigate today’s shifting macro landscape.
Here is a section:
So, the potential for market swings continues. This should not be an impediment to investors putting cash to work, especially given our continued expectation for US equity gains over 12 months, and with both interest rates and cash returns set to fall as the year progresses. For under-allocated investors, we recommend phasing into equities or balanced portfolios to manage near-term uncertainty while building long-term potential for wealth creation.
Investors seeking to shield portfolios from volatility should also hold sufficient exposure to medium-duration high-quality government and investment grade bonds, which would likely perform especially well in adverse growth scenarios. To diversify and hedge against political risks, we also continue see value in holding an allocation to gold with a long-term price forecast of USD 3,500/oz by next June.
And as both US equity and US high-quality bond returns have recently moved in tandem during market volatility, there is also potential merit in the use of alternative investments like hedge funds for uncorrelated sources of return, potential volatility dampening and portfolio diversification, and as a means to exploit potential mispricings across asset classes.
Investors should be willing and able to bear the unique risks of investing in alternatives, including but not limited to greater difficulty in selling them in stressed financial markets (also known as illiquidity).