For two years now I have been saying that equity markets are fragile and on the verge of collapse, and for two years I have been laughed out of meetings by equity managers with their outrageous claims that this bull run will continue for 10 more years.
I believe we are finally at the precipice: the “I told you so” moment.
As someone with funds in the financial markets right now, you have three options:
- You can bet your retirement savings this 17-year bull run will continue;
- You can divest; or
- You can deploy a strategy that seeks 70-80% of the upside, while minimising or avoiding the downside.
For those who are betting the bull run will continue, I don’t know how many more flashing red signs are needed. There is perhaps one more chance for a leg up (more money printing and credit loosening) but this will only hyperinflate prices and cause an even larger disaster on the backend. I for one will not be placing that bet. Just looking through the last couple of months’ returns on industry super fund giants like Australian Super, HostPlus, QSuper, ART, REST, Aware Super, HESTA, Mercer, CBUS and UniSuper – they are clearly not positioned to handle current conditions. I forecast index funds to lose 40 to 60% in the next 1-3 years. To better understand this prediction, be sure to read my next book CHAOS AWAITS: Strategies for Dealing with the End of the American Empire – coming out soon!
For those who divest, I get the temptation, I really do, but unfortunately this is the only guaranteed way to lose money. If returns on cash are lower than inflation (which they are), in a world addicted to fiscal irresponsibility we must either chase a rapidly devaluing dollar or lose. Some degree of risk is mandatory to gain or at least retain current purchasing power. Don’t blame me, blame the government and central banks!
For those who value their retirement savings, if you can find a strategy that gains most of the of the upside while reducing or eliminating the downside, I remain more convicted than ever now is the time to deploy it. The Tuna Salad Wrap (VCo Defensive 50) does just this, and it is during these downward markets that we best appreciate it.
On the HUB24 balanced managed portfolios list, there are only 5 that have performed positively during the last month – ours is one of them.
We charge a fee of 1.82% per annum to provide a wide range of services to our clients including the management of this portfolio. This fee may seem expensive during upward markets where our competitors enjoy more upside, but it is during these times that our investors better appreciate the deal.
For a defensive portfolio of less than 30% equities at the time of writing, our historical returns are incredible, but in my opinion, the divergence has only just begun.
More quant here if you’re feeling nerdy: https://quilla.quantreports.io/portal/reports/monthly-factsheet/view/VCO001/performance/?select=2025-01&type=month