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PaddyMac33

263 Posts.

33

27/05/22

12:41

Post #: 61660688
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Originally posted by 1ronnie: ↑

What does preparing for a Recession look like (IMO)?

* Buy TLT ( premise that yields have or are peaking but of course there is risk of stagflation) incrementally
* Buy AUD Physical Gold (higher gold price coupled with weaker AUD (risk off currency) delivers double whammy)
* Buy BBUS/BBOZ hedge (modest exposure)
* Underweight Equities in general (staying sidelined)
* Overweight Cash (cash rates are rising and cash is great leverage to pick bargains ahead)
* Avoid equity sectors where current employment sits (concentration risk)

I don't subscribe to seeking safety in concentrated sectors that market participants wanting to remain in equity seeking sanctuary in still loved sector e.g energy, materials and financials. The narrative supporting these sectors has been high inflation and rising yields, but this is starting to change now to concerns over dramatically slowing growth-recession, demand destruction and rising bond prices (which may trigger a shift in capital flows from equities to the beaten down bond market in particular Treasury TLT).

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Unless you want to light your money on fire, please everyone do not buy BBOZ/BBUS.
2 Upvote

1 Great analysis

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