almost 2 years ago • 4 mins
Another quarter is almost in the bag, so we’ve been getting a sense of how the Finimize Community is feeling about the markets and the global economy in our fifth Community Pulse survey. And one thing stands out: even confronted by spiking inflation and a full-scale invasion, you’re spotting some reliable ways to bolster your portfolio.
Just a net 6% of you think the economy will be stronger a year from now – exactly the same as in December, and well below the 66% of this time last year (note that we use “net” percentages – i.e. the difference between the percentages of positive and negative responses – so we can compare one survey against another). That faded optimism is also reflected in your outlook for company profits: even fewer of you think they’ll be higher 12 months from now than did in December.
At the same time, your expectations for another surge in inflation have dropped, with a net 37% of you anticipating that consumer prices will be higher in 12 months. This suggests that many of you are optimistic that interest rate hikes from major central banks will get the job done, taming the recent spate of record-high price increases. But it may also suggest that some of you are harboring larger economic worries: that those same hikes are going to dent consumer spending, which could contribute to a sharp slowdown in economic growth.
After shining bright for three straight quarters, your optimism about bitcoin’s price has flickered. A net 44% of you expect bitcoin to be higher 12 months from now, down from 54% in December. Then again, between the last survey and this one, bitcoin’s price fell from around $48,000 back then to around $40,000 – a surefire way to cramp your bullishness for the OG cryptocurrency.
What’s more, your pessimism about stocks continued, with just a net 29% of you expecting global stocks to be higher in 12 months – slightly up from 25% in the last survey, but well shy of the 57% this time last year.
When asked “Which assets do you see most other investors buying at the moment?”, just 25% of you answered crypto – down from 46% in December and the lowest proportion we’ve seen since we’ve been running the survey.
Meanwhile, interest in stocks looks like it’s picked up. But the kinds of stocks have changed: you’re seeing more people invest in cheap-looking value stocks than growth stocks (think tech companies) for the first time – a clear sign that investors are adjusting their portfolios toward assets that are less vulnerable to inflation and interest rate rises. By that same token, you’re seeing people flock to commodities and real estate – traditionally safe havens that keep their value in times of high inflation.
Not surprisingly, the war in Ukraine is at the forefront of your minds when it comes to market risks, followed some way behind by inflation. That stands to reason: the conflict has already sent the prices of everything from oil to food soaring, and it’s thrown global stock markets into turmoil.
There is a positive to take away here, mind you: Covid is becoming less of a concern, in large part thanks to the successful global rollout of vaccines. The pandemic has gone from being top in the list of worries this time last year (and second-biggest in December) to a lowly sixth place now. Here’s to seeing it drop off completely in future surveys…
Even amid significant market risks, there are ways you can adjust your portfolio to protect yourself and, potentially, profit along the way.
If you haven’t done so already, think about buying shares in companies that can pass on cost increases to customers without losing business, such as consumer staples or utilities. And on that same note, consider reducing your investments in growth stocks with high valuations (a trend you Finimizers have already seen happening), since those are likely to be hit the hardest by rising interest rates. Or consider inflation-linked bonds, whose payments climb in line with rising prices.
Commodities can serve as a good hedge against inflation too, and with the war restricting supply, their prices are likely to go higher. Oil is one example now, sure, but as countries around the world speed up their transition to renewables and electric vehicles, commodities in those supply chains – such as lithium, copper, and nickel – could be good long-term bets as well.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.