Dear All
Every year, around this time, a wide variety of finance professionals and investors alike make their own predictions about Global economies, markets and specific investment products. In reality, these predictions are, at best, a guess despite the objective conjecture offered by many of the mainstream financial media agencies. The general purpose of my writing is to probe you, the reader, to really think about the economic conditions that surround you. However, to prove that you don't require a PhD in Economics or a background in accounting, I have decided to offer a number of investments that I personally feel are attractive in the current economic climate towards the end of this article. Please do not take these too seriously as they are only one individuals unbiased opinion and are not specific investment advice.
Before I advocate any singular product or idea, it's time to do some thinking. The principle question that I pose today is: If investors reject the safety of sovereign bonds as a method to preserve capital and generate steady returns, where does all the money go?
It is a very simple question but I am yet to hear an unbiased answer. In times gone passed, investors would have looked at real estate, equities or even municipal debt as a substitution. However, I would argue that both with the present and future dynamics, these are no longer particularly viable options. This is coupled by the increasing realisation that the Emerging world is not quite as immune to boom and bust economics as analysts such as Goldman's Jim O'Neill would suggest.
The more that I think about this question the further I seem to get from a conclusive or comprehensive answer. Initially I thought, buy precious metals. Simple. However, the more that I thought about it, the more I believed that this would create a Ponzi structure and not the investment that my thesis set out to answer. By this previous comment, I mean that Precious metals are a good method of wealth preservation in terms of both inflationary pressure and debasement but their lack of yield would incentivise investors into a bubble formation pattern to produce capital gains.
In reality, what I believe will occur is further dislocation of an already hopelessly confusing market through further investment. Think about it this way. If you think about the timeline of an emerging financial crisis, one would expect a gradual degradation of the market providing that planned intervention is unsuccessful. Yet in the current contraction of the global economy, we are seeing US equity markets return to pre-August levels - albeit on anaemically thin volume - without a single credible plan of rescue from their largest trade counter-party. Perplexing isn't it? I, sadly, believe that this digression from both macro and micro fundamentals is here to stay in both directions.
Before offering my two cents on potential avenues of investment, I feel that it is appropriate that I highlight the key factors that brought me to my conclusions. 1) I believe that there will be a significant increase in money supply over the next annum that will lead to further debasement and inflation (albeit unrecognised on official figures). 2) If questions over sovereign solvency and Arab intentions are pushed further, we are likely to see some form of "war" threats and potentially action. 3) Equities markets, after prolonged hope, will recouple with the levels shown within Fixed Income and FX.
....And here they are:
George Adcock
Founder
www.tickbytick.co.uk [20]
@TickByTick_Team [21]
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