How To Preserve Your Wealth In A Volatile Environment – NDTV Profit
If there was one word to describe the sentiment of markets all around the world in the last eighteen months, it would be, absolutely crazy.
Okay, that’s two words. But that’s exactly what it is.
In a time where unemployment and inflation are worryingly high, stock market indices are having a dream run.
Gold, which is usually considered as a hedge during times of uncertainty and inflation, is now at pre-pandemic levels.
The precious metal, uncharacteristically, has taken a knock in an environment that should have boosted its prospects.
Cryptos, which are a relatively new asset class, quadruple in marketcap every time a tech billionaire (Elon Musk) tweets.
Commodities have also experienced a cocktail of price swings in the past year.
What started out with the price of oil futures turning negative for the first time in history in April 2020, has now flipped 180 degrees. Oil prices hit their highest levels since November 2014.
Even the price of natural gas has soared, with no relief for coal either. It climbed to record-highs leaving the country’s power sector to grapple with shortages.
Metals too have soared. Prices of steel, copper, and aluminium have reached astronomical highs, suggesting a supercycle of sorts.
So, what is going on?
Are we in a bull market? Are we in a bubble?
The truth is no one knows. But what we do know is that there are too many moving parts that at some point in time are going to start falling apart.
That’s a fact. We just don’t know when that will happen.
So, how does one ride this phase of volatility and come out unscathed?
It’s quite simple.
Imagine a cruise liner.
Something as large as an 80-storey building in length and a 20-storey building in width.
In the case of a cruise liner, even if most people gather on one side of the ship or the ship encounters bad weather, it won’t tip over.
You see, modern day cruise ships are surprisingly well prepared for all the bad weather one can expect out at sea. They’re designed to handle even the most severe storms.
Your portfolio should be able to do the same.
So how are the ships able to survive these storms?
Before construction, the naval architects make a ship scale model and put it through all kinds of extreme weather simulations.
This way they check how the future full-size vessel …….