Where Are We? | Our New Market Environment
Real investment. Real assets. Physical buildout of infrastructure. The dollar is still king of the fiat currency world, but all fiat currencies need to be revalued in terms of real asset values. Many financial assets will continue to go up in value but will be offset by currency debasement caused by the rate of money supply growth to keep this game going.
Here are foundations of the risky asset portions of our recommended portfolio:
1) Debasement hedges – Tied to assets that go up in value more than money supply grows. Think gold and Bitcoin. This needs to be a large enough position to move the need, perhaps up to 10%. This is the safest return per unit of risk over the long term, but it is not conventional. These positions maintain purchasing power as fiat currencies all weaken.
2) Infrastructure buildout – A very recurrent theme in our risk allocations.
a. Rebuilding domestic supply chains – Defense and Tech industry inputs, critical metals and emergency response needs
b. Expanding power generation for exponential growth – AI growth, grid stabilization, alternative energy buildout
c. Modernizing the foundation of the global financial system – Blockchain, reducing settlement risk, removing friction from global payments
3) Disruptive technologies – AI, robotics, unmanned defense capabilities, harnessing fusion power -- anything that suddenly reduces the cost of a critical societal need.
What makes an investment a good candidate for inclusion? We balance needs for current yield, tax efficiency and capital appreciation. Most of the need for current yield is provided from the safer fixed income portfolios. Equity income portfolios are the exception, where lower capital gains tax rates improve after tax benefit from qualified dividends. The rest of the risky asset portfolio can be thought of as a barbell approach to potential for Growth in addressable markets and strong free cash flow generation potential as a measure of Value.
Disclosures
All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser prior to implementation. Advisory services are offered through GenSphere Private Wealth, LLC, a Registered Investment Advisor in the State of Washington. Being registered as a registered investment adviser does not imply a certain level of skill or training. All investing involves risk including loss of principal. Past performance does not guarantee future results.