Assets That Everyone Should Own
Whatever it is you’re doing, whether you’re filling up at the gas pump, buying groceries, planning a vacation, or simply paying day-to-day bills, you can feel the financial pinch that’s happening over the last several months.
U.S. consumer prices rose about 7.5% year over year in January; a reading that high hasn’t been seen since February 1982. Which means that if you weren’t fortunate enough to enjoy a salary increase of at least 7.5% over the past year, you’re not realizing any gains. The truth is, you’re essentially operating at a loss. Additionally, the S&P 500, which gained 27% in 2021, was down 9% as of February 2022, leaving mega-cap growth stocks like Netflix and Meta Platforms digging in to determine how best to right the ship.
Lyn Alden, research and founder of Lyn Alden Investment Strategy, believes that investment diversification is the best approach to riding out some of the current economic difficulties. In a recent interview with Stansberry Research, Alden stated that “…if someone is diversified and rather defensive, they can avoid some of the more severe scenarios, while still participating in some of the markets that are actually pretty cheap and that have some growth.”
See which are the assets that Alden suggests taking a look at if you’re planning on diversifying your portfolio.
No Lack Of Energy
Alden is a proponent of fighting inflation through the commodities sector. “If you have inflation, generally you’re getting inflation in energy and other key industrial commodities. I think that remains an attractive environment.” She primarily focuses on defensive values in the sector, including infrastructure businesses, master limited partnerships, and energy transportation companies.
As of February 2022, energy prices continued to maintain a strong upward momentum. WTI crude oil has risen 21.5%, which directly benefits energy stocks. The Energy Select Sector SPDR ETF, composed of S&P 500 companies in the energy service, equipment, and production industries, saw double-digit increases in first few months of 2022.
The Gold Standard
Ever since prospectors have declared “There’s gold in them hills,” the yellow metal has maintained a certain undeniable allure. According to Alden, gold may have a downside protection in certain economic scenarios. “I think it’s a reasonable hedge, basically, that would be a play on the Fed not being able to tighten as much as they’re forecasting. If that event starts to occur, you probably would expect a weaker dollar, stronger gold.”
You can invest in gold through ETFs like iShares Gold Trust and the SPDR Gold Shares. Additional gold investment options include gold mining stocks; when gold prices increase, miners like Freeport-McMoRan, Barrick Gold, and Newmont tend to experience robust operations.
A Bit About Bitcoin
One thing that’s predictable about bitcoin: It’s sometimes unpredictable. Bitcoin traded around $32,000 at the start of 2021, then rose to over $68,000 in November, but as of early 2022 was down to $41,000. But Alden remains “structurally bullish” on the cryptocurrency and strongly believes that adoption of bitcoin will increase in the mainstream during 2022, and for years to come. “So first, it was peer to peer. And then it was the early exchanges that had trouble getting bank access, and then it was the more regulated exchanges. And then it was the more institutional-grade custodians and larger pools of capital coming in. And I think that trend is still intact.”
If you’re looking to dip your toe into the bitcoin world, consider buying bitcoin directly, holding the ProShares Bitcoin Strategy ETF, or looking into companies that have significantly tied themselves to Bitcoin. For example, Enterprise software technologist MicroStrategy holds a total of 125,051 bitcoins, a substantial stake considered to be worth more than $5.1 billion. How’s that for a bit of prosperity?