Wednesday, 6 September 2017

Safe-havens: not only a shiny story

Posted by Valentine at 11:23 Labels:

And simply one day we wake up hearing about safe-haven assets… safe havens here, safe havens there. The term “safe-haven” is now all around the internet and people are still wondering what’s really a safe-haven assets and how can they protect their portfolio.

Let’s see. A safe haven is a type of asset which does not lose value in periods of market stress or uncertainty. Even better, some of them can turn into very profitable trades.

I know… you are going to tell me about you little shiny friend. But believe me, Mr. Gold is not the only one who can protect you and certainly not the one if you are looking for big profits.

1 - Currencies

Have you been following the Korean crisis lately? If a missile passes above you, would you stocks/currency go up or down? What’s your best guess? I see… down. But that’s not really what happened with the Japanese yen last week. Instead, the Nippon currency went up as it plays an important role in the safe-haven category. If the yen can even rise when missiles are flying above Japan, I believe it’s good enough to work out any situation.

Another currency that performs well in times when nobody knows what to expect is the Swiss franc. Call it reputation or call it nonsense, the thing is whatever comes from Switzerland inspires confidence and its currency is no exception.

2 - Bank stocks

In a world when monetary stimulus and low rates dominate the scene, banknotes seem like a pretty good alternative for those looking to keep the bills in the account. For that reason, owning bank stocks could turn into a profitable opportunity as investors get more and more conservative about their capital allocation.

3 - Land

Nothing feels like buying your own house. And nothing feels like owning three or four. Land and property is a good place to safeguard your capital when it comes to difficult times. But of course, you should keep an eye on bubbles to avoid overpriced alternatives.

4 - Luxury items

Following a similar approach to land, luxury items such as diamonds, expensive watches or collection items are blessed when it comes to a financial crisis. But why? People know that these product categories tend to depreciate less than cheap goods, making them an attractive destination for money. Collection items could even increase their value with years.

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