Is Art, Wine or Bitcoin BTCUSD, +0.03% a good alternative in these uncertain times, especially as investors in stocks and bonds stagger from a bloody start to 2022?
With few corners of the financial markets spared from the volatility associated with rising interest rates, a rise in the cost of living and Russia’s war in Ukraine, investors have been looking for places to hide while the Federal Reserve prepares , to fight inflation at 40. annual highs.
Liz Young, Head of Investment Strategy at SoFi SOFI, -3.18%,
an online personal finance company based in San Francisco, said it’s worth a look for investors to consider unconventional assets, especially since times have gotten tougher for traditional investing, but they should keep it simple.
“I think I like drinking my wine,” Young said in a panel Tuesday hosted by MarketWatch. “I don’t like investing in wine.”
Watch below the full discussion on investing amidst volatility, part of a two-day MarketWatch video series titled Mastering Your Money.
Does it make financial sense to bet on wine, art, crypto, meme stocks, and more in a troubled market?
For Victor Jones, head of global strategy at delicioustrade, a Chicago-based financial trading network, it’s all about minimizing downside risk if financial conditions tighten.
“Probably in the last two to three years there’s been a group of people who have been introduced to the markets in a world where the cost of capital has been low,” Jones said. “If you took some risk, the cost of the risk was small.”
But now “the cost of risk is accelerating upwards,” he said, warning that investors have now started “paying a tuition” to learn how to invest in times of hot inflation, lower liquidity and higher volatility.
Other highlights:
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The traditional 60/40 portfolio construction isn’t dead forever, despite this year’s massive correction in bonds, SoFi’s Young said.
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Financial innovations, including partial art opportunities or crypto investments, can give investors the opportunity to hold uncorrelated assets for longer periods, Jones said.
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Meme stocks aren’t a thing of the past, according to Jones, but the definition could be changing. Twitter Inc. TWTR, +3.93% may not be a meme, Jones said, but it’s attracting attention with Tesla Inc. TSLA, -0.37%, Chief Executive Elon Musk making around $43 billion for the social media platform offered.
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It’s not all over for tech stocks, but be careful.
U.S. stocks tumbled on Friday, with the Dow Jones Industrial Average DJIA -2.82%, down nearly 1,000 points and the worst daily percentage drop since Oct. 28, 2020. The S&P 500 index SPX slipped 2.8% at -2.77%. Yields in the Treasury market rose for the week, with the benchmark 10-year TMUBMUSD10Y rate closing in at 2.895%, close 2.9% from the key 3% mark.
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