What to Do in an Uncertain World
After the election of Donald Trump as President, the markets surged and continued to increase after he was sworn into office. But in the last few weeks, reality has set in as the repeal and replacement of Obamacare went down in flames, and now tax cuts are looking less and less certain.
In addition, interest rates are going up. Add to that the foreign policy crisis with Russia after the US bombing of Syria, and rapidly escalating tensions with North Korea.
The stress on the stock and bond markets is increasing quickly and many are worried about the possibility of an imminent downward correction (or worse), especially since we haven’t had a major correction in many years.
In his first-quarter letter to investors of Greenlight Capital, David Einhorn lashed out at regulators. He claimed that the market is "fractured and possibly in the process of breaking completely." Q1 2021 hedge fund letters, conferences and more Einhorn claimed that many market participants and policymakers have effectively succeeded in "defunding the regulators." He pointed Read More
What happens in the coming months is far from certain and many investors are very nervous.
Wouldn’t it be nice to have some strategies in your portfolio that are not highly correlated to the stock and bond markets, just in case the worst happens? Fortunately, there are some options we’ll share with you today. But first, let’s look at the increasing risks the markets are currently facing.
Reality of Governing Sets In
One of President Trump and the Republicans’ big promises was the repeal and replacement of Obamacare. As we all know, their first attempt failed miserably. It’s very possible they will not be able to come together and agree on an alternative approach. So what does that mean for the economy?
Many analysts agree Obamacare will eventually implode if nothing is done to fix it. Healthcare is a big part of the economy, and a failure of this magnitude could have a significant impact on the markets.
In addition, perhaps one of the biggest reasons for the stock market’s surge is the promised cuts to corporate tax rates, as well as cuts to individual tax rates. Keep in mind that part of the reason the GOP started with the repeal and replacement of Obamacare is that they were planning to use some of the savings from their healthcare changes to help pay for the tax cuts. With no such savings now available, it will make passing tax cuts even more difficult.
Republican leaders had hoped to have tax cuts finished by August. Now many are saying that’s just not realistic anymore. It could be the fall or even later before anything is done on this. Republicans disagree on a number of things, including the size of the cuts, how to pay for them and some more controversial proposals like the Border Adjustment Tax.
The future of the infrastructure spending bill is also uncertain. This would pump billions into the economy on so-called “shovel ready projects.” It remains to be seen though if the Republicans can come up with something that can pass both Houses of Congress.
These promises are a big part of the reason for the market’s surge after Trump was elected. Failure to accomplish any of these could impact the markets in a negative way.
Interest Rates Are Going Up
In December and then again in March, the Federal Reserve raised interest rates. They also indicated they plan to have at least two more rate hikes this year, and potentially three next year. Rising interest rates increase the costs for companies to borrow money. Many existing loans are tied to the LIBOR so when rates increase, so do the costs for companies to service their debt.
Furthermore, the Fed recently warned about weakening credit demand and tightening lending standards, which will make it more difficult to get a loan. Companies often depend on loans to fund expansion projects. When the availability of credit declines, it is usually not good for the stock and bond markets.
And let’s not forget that the US has a $20 trillion deficit. When interest rates go up, so does the cost to service this debt. This makes even less money available for government spending projects.
Hotspots Around the Globe
In addition, there are a number of global hotspots that could weigh on the markets. The limited US strike on Syria has caused concerns over escalating US military involvement in Syria and elsewhere. It has also put a big strain on US-Russia relations, which were already at a low-point. Any type of direct US and Russian military conflict could have a very negative impact on the markets.
It could also weigh heavily on the energy markets. Conflicts in the Middle East often push energy prices higher. And don’t forget Russia has vast energy resources. Rising energy prices often are not good for the markets.
North Korea is also a major hotspot, given that they have a nuclear weapons arsenal and a nutty leader who might just be crazy enough to use them. Any confrontation between the US and North Korea could escalate very quickly, and the result could be very negative for the stock and bond markets.
Add to that the strain it would put on US-China relations, which would likely impact trade. President Trump has sharply criticized China for unfair trade practices, and any problems between the US and China, especially with growing tensions with North Korea, could lead to a trade war with negative global implications. Remember China has the second largest economy in the world.
Are We Past Due for a Correction?
The US has just completed its eighth consecutive year of economic growth. For reference, the average post-World War II recovery period averaged just 61 months, roughly five years. Private jobs have grown for 85 consecutive months. The markets recently reached all-time highs. The last really significant market correction was during the 2007-2009 time-frame.
Many believe the markets are past due for a correction. This recovery is getting long in the tooth, so it may not take much for it to turn lower, perhaps significantly. Remember, the S&P 500 lost over 50% from 2007-2009.
When the markets are close to all-time highs, and there is a great deal of uncertainty, they can be more susceptible to negative news or events. It often doesn’t take much to cause a big move in one direction or the other.
The Need to Diversify in This Uncertain World
Most everyone reading this understands how important it is to diversify your investment portfolio. With the fate of Obamacare and tax cuts unclear, interest rates rising, tensions increasing around the world and the stock markets at or near all-time highs, there is a great deal of uncertainty in 2017. This makes diversification even more important.
Yet proper diversification today requires more than a traditional allocation to stocks and bonds, since they can both suffer when markets drop. It requires alternative investments that are not highly correlated to the stock and bond markets, ones that can potentially do well even if the markets drop. And if the markets keep going up, you want strategies that can still prosper.
So what’s an investor to do?
Investors Need Options: We Have Them
Fortunately, Halbert Wealth Management has three new strategies which have delivered impressive results without investing in traditional stocks or bonds. All of these investments are not highly correlated to the stock markets, so they have the potential to do well even if the markets drop. They can be an excellent way to help diversify your portfolio.
Two of these three strategies are only available to “accredited investors.” If you are an accredited investor, you need to let us know ASAP. We can only share more information on these two once you confirm you are accredited.
What is an accredited investor? An accredited investor is generally someone with a net worth of at least $1 million (not including primary residence) or an annual income of at least $200,000 for the last two years (or joint income with your spouse in excess of $300,000 for the last two years).
If you want to SEE ALL OF THE INVESTMENTS WE OFFER, you need to let us know if you are an accredited investor. Remember, your financial information is completely private with us.
So if you are an accredited investor, be sure to use the link below and complete our short certification form so we can provide you with information on these unique programs:
These successful strategies can help you diversify your portfolio – without being highly correlated with the stock and bond markets. If you have already completed this form, call us at 800-348-3601 and we can provide you with detailed information immediately.
The third strategy that is not limited to accredited investors is offered by a leader in the world of alternative investments with over $16 billion in assets under management. They invest in a variety of alternatives including private equity, senior secured loans, event-driven credit, venture capital and real estate, among others.
The strategy seeks to lend to middle market companies with defensible market positions; stable, positive cash-flow; proven management teams; and viable exit strategies. The strategy’s objectives are to generate dependable current income, and to a lesser extent, long-term capital appreciation.
This strategy does not involve traditional stocks or bonds and therefore is not highly correlated to those financial markets. This investment should be a serious consideration for most any sophisticated investor who is seeking a way to help diversify their portfolio.
Call Now to Learn More About These Investment Opportunities
These strategies have the potential to do well, even if the markets drop. They also have the potential to do well if the markets continue to rise. They are not highly correlated to the stock and bond markets and can help you diversify your portfolio away from traditional stocks and even bonds. (Past performance is no guarantee of future performance.)
Again, if you are an accredited investor, let us know so we can share information about these strategies with you. If you are not accredited, you should seriously consider the option described above. We also have several other risk managed programs for all investors.
Call us today at 800-348-3601 to learn more about these attractive strategies. We can provide you with detailed information, including their actual returns.
We are very excited to have found these strategies. They provide unique options for clients in an increasingly uncertain world.
If you are worried that the stock markets are in nosebleed territory, and that the Fed is now seriously committed to raising interest rates significantly, you owe it to yourself to at least check out these three new strategies that don’t invest in traditional stocks and bonds – and have the potential to do well even if stocks and bonds turn lower.
Thank you for your continued confidence,
President and CEO
Halbert Wealth Management, Inc.
Past results are not necessarily indicative of future results. All investments mentioned have the risk of loss. Be sure to read Offering Memorandum/Prospectus for the strategies before deciding to invest.