Attended a Business Conference yesterday. I summarize the key points for the investment outlook presented by Sani Hamid (Director, Wealth Management (Economy and Market Strategy) of Financial Alliance Pte Ltd).
- Gold’s tumble is not a concern. Focus remains on gold as insurance, not a commodity nor currency.
- Gold is the ultimate ‘anti-bubble’ amid falling bond yields.
- There are bigger concerns:
- Increasingly a very worrisome “dysfunctional” environment:
– Dysfunctional Monetary Policy
– Dysfunctional Economies
– Dysfunctional Fiscal Policy
– Dysfunctional Markets
- Increasingly a very worrisome “dysfunctional” environment:
- Not a normal environment. Risk should be THE key focus, not returns.
- Dysfunctional Economies
- Despite low interest rates and abundant liquidity, economies remain mired in slow & low growth.
- Current debt levels now sit at a record 225 percent of world gross domestic product, the IMF said in its semi-annual Fiscal Monitor.
- Financial crises tend to be associated with excessive private debt in both advanced and emerging economies.
- If companies postpone paying off debt,they could become “very sensitive to shocks, increasing the risk of an abrupt deleveraging process.
- Dysfunctional Fiscal Policy
Dysfunctional Markets
- Equity markets continue to hold up despite weak profitability and revenue growth.
- While bond markets burst at their seems despite being a crowded trade.
- Investment Strategy:
- Not about timing the market but rather smoothing volatility
• Our defensive strategy should not be confused with timing the market. Done to lower the market volatility.
• Because clients are only human –inability to take sharp swings.
- Not about timing the market but rather smoothing volatility
My key take away for current market condition:
- Defensive
- Manage Risk by portfolio diversification
- Focus on out performers
- Portfolio re-balancing to manage the volatility
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