Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Marrin Talks
Speaker 1: Your Money, the personal finance edition of Marin Talks Money
Speaker 1: and these bonus podcasts. We talk about the best strategies
Speaker 1: for making the most of your money. I'm married some
Speaker 1: deetweb and with me Senior Border of Money to stilled
Speaker 1: author John Stappack Hi John hil Okay, John, there is
Speaker 1: a lot going on this week. We've got rising tensions
Speaker 1: in the Middle East. We're worried that conflict is going
Speaker 1: to engulf more of the regions. So we really wanted
Speaker 1: to take a moment right now to talk about exactly
Speaker 1: how people should be looking at their portfolio in this
Speaker 1: kind of environment. And I kind of don't know why
Speaker 1: we're bothering because I already know what you're going to
Speaker 1: say and exactly the same way as you look at
Speaker 1: your portfolio in any other environment, am I right?
Speaker 2: Yeah. The phrases that wonderful producer sum Are sent over
Speaker 2: for the topic of this podcast was the phrase safe haven.
Speaker 2: There are phrases I hate more in finance, but it's
Speaker 2: very high on the list because.
Speaker 1: For him, I apologize for him, doesn't mean it not personal.
Speaker 2: She's just having them at me viewers. Hell, hr.
Speaker 3: Enough enough.
Speaker 1: What is what you're trying to say that there is
Speaker 1: no such thing as a safe haven in a risky world?
Speaker 2: I know, I think it's more safe haven is very
Speaker 2: dependent on what you're trying to protect yourself. Well, for
Speaker 2: a start, it's like it implies that when people write about, oh,
Speaker 2: what safe haven should you go for now that war
Speaker 2: has erupted, it kind of implies the kind of market
Speaker 2: time and that they always complain about otherwise. So there's
Speaker 2: this idea that you should suddenly move all your money
Speaker 2: to cash or something like that, just because it's kind
Speaker 2: of scary. Headline has has come over, and there are
Speaker 2: always scary headlines coming over. I mean, I think tensions
Speaker 2: in the Middle East is probably the one kind of
Speaker 2: constant of my entire lifetime, and there is always something
Speaker 2: going on. There is always something to be worried about.
Speaker 2: So there's that, But there is also the safe having thing.
Speaker 2: Cash is a safe haven in as much as its
Speaker 2: value will not go below its nominal value. So if
Speaker 2: you put ten pounds in the bank or you know,
Speaker 2: under your mattress, it will still be ten pounds in
Speaker 2: ten years time, but will ten pounds still buy you
Speaker 2: the same amount of stuff. No, it won't, so it's
Speaker 2: lost value in real terms. So it's actually not a
Speaker 2: safe haven, you know, if you're about to get inflation.
Speaker 2: Same goes for bonds, which aren't as volatile. They don't
Speaker 2: go up and down as much as equities, but if
Speaker 2: inflation comes along, they're going to be watch worse for
Speaker 2: you than probably equities will be.
Speaker 1: Cash is a safe haven if you're getting an interest
Speaker 1: on it that is above the right of inflation. If
Speaker 1: your main priority, and john whether you like it or not,
Speaker 1: the main priority for lots of people is simply to
Speaker 1: maintain they're purchasing power. So if they have cash and
Speaker 1: they have it in an account, the interest rate of
Speaker 1: which covers both the tax on the income and inflection,
Speaker 1: even if they're even at the end, they're good.
Speaker 3: That's the safe heaven.
Speaker 2: That's true as long as you've got enough money. If
Speaker 2: you've retired and say you're seventy five, and you now
Speaker 2: know you've got enough money to last you for the
Speaker 2: rest of your life, and you can find an account
Speaker 2: that pays in real terms, and you're going to keep
Speaker 2: up with it for again, the kind of the rest
Speaker 2: of your life. Then yeah, that's probably what it's close
Speaker 2: to safe having as you could get. If you're twenty five.
Speaker 2: You can't put your money all in cash because you're
Speaker 2: not gonna have enough to retire on when you come
Speaker 2: to retire, So you're going to have to do something
Speaker 2: with it, whether you like it or not. And again,
Speaker 2: sort of history shows that over the very long term,
Speaker 2: equities deliver the best real returns. Hopefully. I mean, yeah,
Speaker 2: you cannot. You can always point to oh yeah, but
Speaker 2: Japan might happen, or you know, it might turn that that.
Speaker 2: You know, you're in Germany or Russia right before the
Speaker 2: revolutionary before the same World War. The only safe having
Speaker 2: is to diversify. See Stick some money in gold because
Speaker 2: it kind of protects against kind of crazy events and
Speaker 2: also kind of fiscal uncertainty. Stick some money in cash
Speaker 2: because it gives you the optionality I'll typically kind of
Speaker 2: keep up weigh inflation, but it won't it won't grow
Speaker 2: you enough to retire on if something bonds in case
Speaker 2: of deflation basically, and you have the rest in equities
Speaker 2: for the kind of growth side. And I mean, obviously
Speaker 2: it's it's a bit more complicated than that depending on
Speaker 2: your own personal circumstances, et cetera, et cetera, et cetera.
Speaker 2: But I think those are the four primary colors of
Speaker 2: asset allocation, and really how you'd have split between those
Speaker 2: blocks down to what your goals are and anything that
Speaker 2: makes you think I should be running for a safe
Speaker 2: having well that you need to stop and think, well,
Speaker 2: wait a minute, why am I thinking this right now?
Speaker 2: Because there hasn't been a point at which you should
Speaker 2: have all of your money only in one asset unless
Speaker 2: you're confident you've get accessable and you can work out
Speaker 2: exactly what's going to harm you. I mean, even two
Speaker 2: thousand and eight, which was the WOSCA financial crisis of
Speaker 2: life times and quite possibly will be the worst financial
Speaker 2: crisis of our life times, there wasn't something you could
Speaker 2: describe as a see if haven permanently see if even there, employee,
Speaker 2: if you put all your money at the US dollars
Speaker 2: or something like that had been the best trade at the time,
Speaker 2: but again it had been a one off trade.
Speaker 1: You are making a lot of sense, But I suppose
Speaker 1: that the key point here is there will be a
Speaker 1: lot of investors who are still spite listening to this podcast,
Speaker 1: very very overexposed to the US, possibly under exposed to gold,
Speaker 1: possibly not with very much cash, and possibly under exposed
Speaker 1: to non US equity markets. So even though we've talked
Speaker 1: about this a lot over the last few years, the
Speaker 1: US market will still the best place to be until
Speaker 1: relatively recently, not anymore and not this year, but until
Speaker 1: relatively recently, so a lot of listeners, we'll still have
Speaker 1: that portfolio, that sort of one trade portfolio that is
Speaker 1: very avoid the US and doesn't have much So really,
Speaker 1: I think what we're saying at the moment is that
Speaker 1: if that is you, now is a time a bit late,
Speaker 1: but you know, it's all fine. Now is the time
Speaker 1: to look at them and say, do I really want
Speaker 1: that heavy exposure to one country with extremely expensive equities
Speaker 1: or might it be better to cut that down going
Speaker 1: to countries with less expensive equities and also into some
Speaker 1: of the things that are traditional head just such as
Speaker 1: cash and gold. And of course, if you want to
Speaker 1: hedge we were talking about this earlier, if you want
Speaker 1: to hedge against done the trouble in the Middle East itself,
Speaker 1: then possibly holding some energy and oil in particular is
Speaker 1: a good way to do that.
Speaker 3: Is that fair. I think that's basically what you're saying.
Speaker 2: Oh, no, thing that is fair, And I think yeah.
Speaker 2: I mean if you had all of it explores, then
Speaker 2: that way, that has been a certain failure of diversitytion
Speaker 2: and asset allocation or you on your part or in
Speaker 2: the part of your financial advisor or whatever, and it
Speaker 2: would be a good idea to, you know, think about
Speaker 2: rectifying that.
Speaker 1: Yeah, and I sup the it's also another opportunity for
Speaker 1: us to remind people that if you hold a global
Speaker 1: ETF you are not diversified.
Speaker 2: Yeah, I mean it's still something like sexty odd percent
Speaker 2: is going to be in US equities, and that hasn't
Speaker 2: always been the case. Because I think that's the other thing.
Speaker 2: People sometimes think, oh, yeah, but hasn't that always been
Speaker 2: the case, and it's like, well no, actually, really it
Speaker 2: really hasn't. That's a symptom of us or valuation.
Speaker 3: Yeah, so you see that exemplified in the market.
Speaker 1: Okay, I'm not sure there's really much more that we
Speaker 1: can say about that. And we talked, we talked in
Speaker 1: our markets around up earlier in the week about crypto
Speaker 1: and how it hasn't really been working as a hedge
Speaker 1: or a particularly good diversifier over the last short period.
Speaker 3: That remains a case, right, Yeah.
Speaker 2: I don't think that if you are a fairly hands
Speaker 2: off investor, you really need to body about having kept
Speaker 2: to exposure and your portfolio again that and against it.
Speaker 2: I don't think that it's all a scarm. I don't
Speaker 2: think we're going to wake up one day and it's
Speaker 2: going to be vanished.
Speaker 3: He does.
Speaker 2: Really, I'm urging here. I don't want all the tweets.
Speaker 2: I don't want all the.
Speaker 1: Tweets, all right, I haven't got anything more to say,
Speaker 1: have you, John.
Speaker 2: I don't think it's just it's this straightfall stuff. Diversification
Speaker 2: as an allocation, that's your safe haven. It rains.
Speaker 3: Yes, and don't forget.
Speaker 1: This is the key point we talked about there on
Speaker 1: a couple of podcasts with Gas recently, that if markets fall,
Speaker 1: let's say they fall, let's say global markets fall twenty
Speaker 1: five percent or something like that, the ones that will
Speaker 1: recover that fastest are most likely to be the ones
Speaker 1: that were cheapest in the first place. So it's worth
Speaker 1: thinking about that. The UK, Latin America, where else is.
Speaker 3: Cheap, honestly just about.
Speaker 2: Cheap the moment I imagine markets, particularly ploy could do
Speaker 2: with the day in the sun. But then you have
Speaker 2: said that for a while.
Speaker 1: Yeah, got a few good imagining markets podcasts coming out,
Speaker 1: By the way, everyone listen.
Speaker 3: Out for those excellent Thanks for listening for this week's
Speaker 3: Marren Talk to Your Money.
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