At the recent Tiger 21 meeting, bears still outnumbered the bulls. If you’re a contrarian, that’s a good thing. Tiger 21 is a peer group of wealthy investors that manages approximately $18 billion in assets.
Experts presenting at the meeting noted some valid concerns: artificially low interest rates, potentially disruptive global financial situations, and continuing concerns about government debt.
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The emphasis was on being prepared. Even as equity prices are climbing, investors should not lose sight of how quickly real returns can turn negative when the inflation monster hits.
Thinking about the global macro-economic picture when making investment decisions is also key. You can make the best decisions but if the macro picture doesn’t support it, you can make significant investment mistakes.
There were other innovative ideas at the meeting, like the premise that investing in northern European countries offers exposure to emerging markets.
This is because European countries don’t have enough domestic demand. They have to go out of their way to find returns.
Distressed investing is one way to take advantage of the recessionary environment in Europe.
Legal structures in northern European countries provide various safeguards because the rule of law dominates.
But make no mistake, the US economy is still dominant. The saying so goes the US goes the world is still valid.
That means the US deficit and inflationary pressures are still major concerns. That leads some experts to be fearful of the complacency exhibited by Congress about addressing the deficit.
Finally, experts say it’s a prime time to invest in real estate. Yields on property are greater than the debt components, creating a positive leverage situation.
Buying below replacement costs protect against inflation. The key for any investment, say these experts, is to measure risk versus reward.