How to diversify your portfolio to protect yourself from market risks? (10/20)

At the moment, the hyper-expansionary policies of central banks are not only favouring stocks through zero or even negative rates, but also long-term bonds by buying them. Despite this, for the moment (but this may be changing), inflation remains more or less stable. Everything is being done to revive growth. There is a big boost effect on the financial and bond markets, but a fairly modest effect on the real economy.

In short, we have the feeling of having reached an inflection point whose range of possibilities is not necessarily encouraging. It is therefore difficult to say what will happen. One thing is certain, however: gold likes uncertainty, sooner or later stocks will crash and sooner or later long-term bonds will do the same. Maybe even at the same time.

Compared to the three other asset classes mentioned earlier, cash which yields nothing, overvalued stocks and long-term bonds which are expensive and risky because of current interest rates, gold can hold its own. As the following statement says: Awakener, gold should be considered just as a currency that does not depreciate due to inflation. It is therefore not an investment, but a reserve.

In any case, a little bit of gold in a portfolio doesn't hurt... On the other hand, to put 25% in a portfolio, you have to have really strong nerves and accept de facto underperformance over long periods.

In short, for gold: use it as a hedging instrument, but not as an investment pillar in the portfolio. As far as I am concerned, a position of 5% of the portfolio is sufficient. It smooths out the hard knocks very slightly, without too much harming long-term performance, and allows you to buy back depreciated assets following a major clash.

This position also plays its role as a measuring standard (as we saw for the stock/bond ratio), "forcing" us to exit assets that have appreciated too much against gold and vice versa. To buy some, the easiest way is the ETF hedged in CHF AUCHAH (0.23% management fees). You can also buy mining companies if you have a strong heart...