The Australian sharemarket lost around $60bn in the first week of October, which is historically a challenging month for investors, but in his latest Livewire polemic, Portfolio Manager Dr Jerome Lander argues investors should start preparing themselves for a recession “we have to have.”
Dr Lander asserts central bank stimulus has created an “Everything Bubble” built on easy money, making mainstream asset prices fictitiously large relative to the size of the economy and incomes.
Inevitably current economic, political and financial challenges will require markets to come to grips with reality.
Investors can act to protect themselves from large market falls and reduce market risk without resorting to cash alone. They can position their portfolios diversely to protect their capital in adverse market conditions and yet still achieve a prospective return, without suffering no effective return in cash should market prices remain highly elevated.
How can this be achieved?
“One can benefit from both capital preservation and more prospective returns than cash through investing dynamically, selectively, and skilfully in absolute return managers whose return streams are not market dependent. Simply put, if the market is ripe for a fall or years of low returns, simply avoid and minimise this risk by investing in unrelated skill-based returns which offer many of the benefits of cash, but with much better return prospects than cash. In this way, investors can win either way – they can make money if markets continue to defy gravity, yet they can also protect capital and still be relatively well positioned should markets collapse.”
If you have any questions please email the team at firstname.lastname@example.org or call +61 3 8560 1440.
IMPORTANT – This content may contain privileged and confidential information or information that is subject to the laws of copyright. Our documents are prepared in good faith, but we provide no representations or warranties as to the currency, accuracy, reliability or completeness of any information, statements, opinions or conclusions contained in this content, the attachments or any third-party website hyperlinked to this content. Any views expressed in this content are those of the author and therefore this content and any attachments, particularly those not prepared by Lucerne Investment Partners, may not necessarily reflect our views. The information contained in this content and any attachments does not necessarily take into account the investment objectives, financial situation or particular needs of any particular person. Investors should take into consideration any product disclosure statement, prospectus or other disclosure document, and obtain advice based on their own individual circumstances, before making an investment decision. Past performance is not an indication of future performance.
Lucerne Australia Pty Ltd is a Corporate Authorised Representative of Lucerne Services Pty Ltd (AFSL: 481217)