![]() You already know which asset class I’m personally backing: It’s equities (see here for why). The rest of this letter is about these dilemmas.ĭilemma #1: equities are long-term safe, but short-term risky Some assets defend well in small sell-offs, but collapse in large ones.Assets that defend well in one sell-off can fare badly in the next.Equities are (I believe) safer assets over the long term, but are volatile in the short term. ![]() How can you negotiate this web? I see three big dilemmas 1 to wrestle with. Which means the riskiness of cautious assets has risen just as people need cautious assets. Then Economics 101 says rising demand for an asset (without rising supply) makes its price rise, while Investing 101 says if an asset’s price rises (without its fundamentals improving) it becomes higher risk. The outsized baby-boom generation are all hitting retirement at the same time, and the textbook tells them to hold “lower risk” assets. ![]() This is unfortunate because there have never been so many cautious investors. Not within most of our working lives, anyway. It’s never been harder to be a cautious investor. ![]() Downing Fox Investment Letter - Q3 July 2023 ![]()
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