As geopolitical tensions rise and stock prices fluctuate, investors may want to take a step back.
DBi’s Andrew Beer suggests the market’s crystal ball is broken.
“It’s not normal for large markets to move this much,” a managing member of the firm told CNBC’s “ETF Edge” this week. “Something is seriously wrong with the market’s ability to predict global conditions…The only thing we can all do as investors is now is the time to plan and prepare for the worst. You hope for the best.”
Beer, who has spent more than 30 years in the hedge fund industry, thinks it’s surprising that despite all the stress on the financial system over the past 12 to 18 months, things didn’t spiral out of control.
“Today, the geopolitical risks are just more layered.” [and] “There were more financial risk factors than I can remember at any time in my career,” he added.
Beal urges investors to ask themselves what they would do if the market downturn of 2008 or 2022 were to happen again.
“These financial assets are investments, but they’re also things you need to survive, survive and retire. So what I want people to focus on is the very real human side of financial assets,” he added.
Beal says investing as if 2025 has arrived could lead to regrets.
“The best thing to do in 2025 is to turn off your computer at the beginning of the year and come back at the end of the year, so you could make money on stocks and bonds and everything else,” he said. “This cannot continue. We are going to experience even more difficult times.”
Beer said recent movements in gold, silver, bitcoin and oil highlight how difficult it has become for investors to adjust their portfolios, especially in the face of sharp reversals over short periods of time.
“No one has a strategy for that,” Beal said, adding that he is also watching for signs of strain in private credit, insurance company portfolios and other areas of the market where unusual stress could begin to spread.
Nate Geraci of NovaDius Wealth Management highlighted exchange-traded funds, specifically managed futures ETFs, that are designed to provide portfolio protection.
“This is definitely a long-term asset allocation, and I think of it like portfolio insurance,” the company’s president said in the same interview. “You need insurance in case something goes wrong in the market. It could be that stocks and bonds go down together.”
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