So, the potential impact for all the stimulus, which is not really stimulus, but more backstopping the pandemic economic damage preventing a systemic real estate banking crises, is to cause the dollar to fall, and interest rates to rise. As alot of older aged / retirement portfolios have bond funds, so there is a risk to bond fund asset price reductions.
So what is the best way to protect your bond fund asset decline?
1 is to take an outright hedge by shorting bond instruments yourself, short TLT, put options on TLT etc.
2 is to purchase some gold
3 is to look at WisdomTree Interest Rate, Hedged U.S. Aggregate Bond Fund, or other hedged bond funds
4 diversify into a some real estate investment trusts where rents will return and underlying assets will increase over time.
5 sell a portion of the bond funds and by back later when interests are higher.
What the equity market prices are predicting is that with the vaccine available and in distribution, that there will be a pandemic tipping point where all of a sudden, the infection rate will drop like a rock, and the world will begin to return to normal. looking 6-9 months ahead, the end of the summer is the latest market prediction, and the pros who are looking 1-2 years into the future are betting on that.
However, as in 1918, the economic structure of the workforce dislocation will change human behaviors for a long time, and owners of houses in the villages are in a good place to take advantage of the us residential tax migration which is currently underway. . . but there are always tipping points, being congestion and service demands which can't be maintained. . .
good luck, but that's the way i see the investment landscape for 2021. . .
sportsguy
currently long VXX equity volatility (small)
short TLT (medium) as a hedge
short (NKLA, and a few other low revenue high valuation stocks)
80% bond funds, 20% equity overall, waiting on a reasonable valuation to increase equity to 50% or more.
