This feels like a particularly risky time to me. The macro situation is not great; rising interest rates, trade tensions, saber rattling, etc. In tech we have dominant platforms extracting rents but also attracting scrutiny. Old line industries continue to struggle to adapt to new ways of doing business. And health care continues to eat up more and more of the GDP.
So what is an investor to do?
I think a barbell strategy is best in this environment. You want a healthy amount of low risk investments, like cash and low volatility cash producing assets (like real estate). And you want some risk too. I like venture capital and tech stocks, particularly ones that are not in the regulatory spotlight.
The thing about risk is that it is correlated with return over time. It is very hard to make money without taking risk. And those who tell you that they have a low risk/no risk way to make money are either lying to you or lying to themselves.
So you need to take risk. But you need to take risks you understand and avoid risks you don’t. I think there is a lot more risk in “the markets” than is priced in right now.
I don’t know if all the chickens I listed in the opening paragraph will come home to roost, or when. That is uncertainty. We have to live with the uncertainty. It’s always there.
So the stance you take is important. And I think the best stance in times like this, maybe all times, is one foot in and one foot out.
