Since 2016, the world has become an even more unpredictable place. Unexpected events such as Brexit and the election of Donald Trump have created a new climate of elevated risks. The world is reaching a critical point of inflection after years of rising conflict and political tension, some prominent investors believe. The current geopolitical landscape is particularly problematic for investors to navigate because it is difficult to quantify the impact in dollars and cents.
In an industry that yearns for predictability and accurate economic forecasting, unanticipated geopolitical conflicts can cause chaos in the global marketplace. History shows us that the uncertainty of war and political revolutions puts a strain on the global economy. Now, with the current instability of global affairs, we must expect the unexpected. As the economy continues to show bullish patterns, many experts remain skeptical. As international tensions rise, investors are constantly looking for ways to hedge their investments against the threat of geopolitical volatility, while hoping for a stable and prosperous future.
The below infographic from Sprott Asset Management explains which geopolitical risks are receiving the most attention from prominent investors. In addition, it reveals what actions those Prominent Investors are taking in order to protect their wealth from geopolitical uncertainty and stock market risk.
In his book, The Dhandho Investor: The Low–Risk Value Method to High Returns, Mohnish Pabrai coined an investment approach known as "Heads I win; Tails I don't lose much." Q3 2021 hedge fund letters, conferences and more The principle behind this approach was relatively simple. Pabrai explained that he was only looking for securities with Read More
Some investors, including Ray Dalio of Bridgewater Associates, say to stay liquid, stay diversified, and not be overly exposed to any particular economic outcomes. Dalio also recommends a 5%-10% position in gold. Warren Buffett believes cash is king, and his Berkshire Hathaway now has $99.7 billion in undeployed cash, the most in the Company’s history. David Einhorn, of Greenlight Capital, recommends keeping gold as a top position in your portfolio.
Although these Prominent Investors may differ in strategy, they share the same skepticism of today’s bull market and are taking action to hedge against uncertainty in the global political climate. Read below to hear more from these global investment managers and others.
Article by Sprott Physical Bullion