A more demanding season is opening up for those who invest, in which risks increase and opportunities decrease. This is the opinion of Alessandro Fugnoli, Kairos strategist, who identifies five reasons to explain the new scenario: inflation more persistent than expected, the pandemic which returns to raise the alarm level, supply-side bottlenecks, the profile of a monetary normalization – which precisely because it is postponed risks being more painful in the end – e the high ratings of most financial assets.
In the last episode of the monthly podcast “On the fourth floor”, Fugnoli explains that "in normal times it would be enough to reduce exposure to risk and position oneself on calm assets", but in this phase - with real inflation high and rates still negative - the liquidity option "becomes expensive in turn" , and it is advisable "only for short periods: staying liquid is in fact an unsustainable strategy".
What to do then? "The first move is to try to continue putting hay on the farm - continues the analyst - by exploiting the spaces that the share price increase can still offer", also because we still have to face "six to nine months of sustained growth of the global economy and of useful in strengthening, without all of this being disturbed by rising rates”.
If the performance of the stock market becomes more hesitant and erratic, therefore, “it will still be worth it keep the most significant part of the portfolio on the stock exchange at least until the middle of next year”. However, it will be better to "unload the more speculative share component and be careful of stocks that are too tied to fashions and those with particularly high multiples".
At the same time, “it is better to restore in wallets a safe-haven component”, continues the Kairos strategist, underlining however that care must be taken, because “these assets require high skills and often have high transaction and conservation costs”. The property, for example, "they are very expensive around the world and must be evaluated in the light of taxation and the possibility of renting freely", given the global diffusion of rent control policies.
As for cryptocurrency, “they have no underlying value and require a leap of faith.” For this reason, Fugnoli argues that “the old gold remains the more comfortable alternative”, having the advantage “of being an object of interest also for many central banks”.
Also, a niche that offers a good hedge against inflation is “that of venture capitalparticularly attractive in a phase of recovery of productive investments such as the one that is looming for the next few years. Indeed, its time horizon makes it possible to look beyond short-term fluctuations", not to mention that "the growth potential of nascent companies can be much greater than that of mature companies".
Alongside all this, concludes the Kairos expert, “it will be possible to maintain a monetary and bond component as a liquidity reserve. The purchasing power cost of this component will be well bearable if the rest of the investments maintain a return above inflation in the coming months”.
