PORTFOLIO DIVERSIFICATION IN 2020
Posted By: Dr. Vernon Thomas, June 22, 2020
The US Economy has entered uncharted waters with the US debt approaching $30 Trillion, and a continuous threat from Stock Market Volatility and Risk. With debt that substantial, it will be a long, slow road to Financial Recovery.
The Best Blue Chip Stocks and the Best Dividend Stocks can form the Recession Proof stocks portion of a proper Stock Diversification Portfolio. But true Portfolio Protection now requires much more than that! Bear Market Financial Advice is everywhere, but that is not a replacement for proper Financial Diversification.
With the threat of Stock Market Volatility continuing through the decade of the 2020’scombined with looming high inflation, investors are seeking alternatives to stocks and bonds for a percentage of their portfolio.
Along with Recession Proof Stocks and Bonds, any prudent Advisor should recommend at least 25 percent of a balanced portfolio put into Hard Assets. Gold as an investment has been touted by many, but it has lost much of its’ lustre! Now gold can be bought on margin thanks to effective control of the market by many of the same “actors” who brought us the crash of 2007-8! It is not the “sleep at night” solution it used to be!
HEDGE AGAINST THE U.S. DOLLAR
Currency ETF investing provides the average investor with an opportunity to hedging the value of the US dollar. Traditionally in the past,Stock Diversification also included investing in overseas Stocks and Bonds to provide a greater degree of Portfolio Diversification, but now that introduces the added risk of floating Currency Exchange volatility. Since Foreign Exchange rates can have a significant upward or downward impact on Portfolio Returns, Investors should look to safer vehicles to hedge risk.
To profit and insulate a Portfolio from fluctuations in currency valuation, traditionally Investors could trade currencies, Futures, Forwards, Options or a Forex Account.
With ETF investing, especially a Currency ETF, you can either hedge directly against the US dollar (example the Swiss franc against the US dollar) or a buy basket of currencies.
Both options, however have Governmental reporting requirements in the U.S. exactly the same as any US Stock, Bond or ETF investing scenario.
To combat the Threat to Financial Privacy, Colored Diamonds, Gemstones and Vintage Watches are private property and have no reporting requirements, providing the ultimate in Privacy. The best Hard Assets provide a strong hedge against US dollar fluctuation because they can be purchased and sold in multiple currencies around the world. For example, a Colored Diamond could be purchased in US dollars and then sold in euros or any other currency that positively affects the buying investment.