Investment implications (Dr V. Anantha Nageswaran )


Investment implications (Dr V. Anantha Nageswaran )
Build a portfolio that would stand volatility and insure (hope to) against downside risk in the next 24 months
Keep a small portfolio of high quality stocks
As for stock markets, Japan, Russia, Thailand make sense to us
Invest in no-default history Emerging Market bonds for coupons
Keep cash in three structurally sound sovereign bonds
Diversify into physical precious metals, agricultural commodities. Retain exposure to crude oil (Energy Fund or stocks)
Keep a sizeable portion in cash in a diversified portfolio of currencies
Take ‘known downside’ bets on over and undervalued currencies using cash portion as collateral
Convexity is what we are likely to see in the next two years
“It’s easy to forget that responses to actions aren’t linearly proportional to the force applied, that many situations have a convexity in which just a little more can make all the difference, and a little less does nothing.”
Some potential convexity areas:
“That China won’t run into social trouble in the long run either, even though so far everything proceeds linearly towards growth without political freedom.
As for the US, sooner or later there will arise a successful popular nonlinear response to the linearly increasing concentration of economic power that isn’t devoted to popular improvement
Insanity: doing the same thing over and over again and expecting different results
Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.
Albert Einstein

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