As Stephen Brawn, the Principal of Locus Capital Consulting, said recently “the malaise in the equity and currency markets, and the collapse in commodity prices, appear to simply have crept upon us, but in reality the information and signals were there for anyone who cared to look”.
“Make no mistake, there are opportunities for investors that can hold certain risks in the medium term as a result of price moves in the past year or so, but simply diversifying is not enough”.
When asked to elaborate, he said “Investing should only be performed after looking forward by asset and strategy; having a broad spread of assets will not help if they’re all going down in price at once”.
Is that a risk? “Undoubtedly many assets have benefited from loose monetary policy, and as of February, we’ve seen reversals in the liquid equity and credit markets as well as some more esoteric assets.
“The shine has come off art, wine, and diamonds, for example, and logically it’s only a matter of time before other assets and collectibles are effected too”.
What sorts of investments are preferred then? “I spend a great deal of time and effort in selecting low profile hedge funds as well as specialist long only strategies, and frankly 2016 has been positive so far.
“The investment universe doesn’t always value such a selection process, preferring, often unsuccessfully, large hedge fund managers that still close having made nothing for investors”.