"Where should I invest?"

Asset allocation pieces have a grand and long-standing tradition in big banks.

They pop up at the beginning of each quarter and remind us about the most important investment decision we must make: portfolio allocation.

So here’s 6 profiles of portfolio allocation - each one with its own merits:

Cash is king: 100% in cash. T-Bills give you 5.4% yield. With inflation falling fast, that’s not a bad place to be.

Treasury Bug: 100% in 10Y Treasuries. The end of the hiking cycle is in sight AND it’s entirely possible we see rate cuts next year. Long bonds do well in this scenario, and give you 4% carry in the meantime. Treasury bugs will hold on to their USTs until they can buy the market at a much cheaper P/E.

Risk Parity: [60% in Treasuries] + [40% in your favourite stocks]. Risk Parity’s century-old track record is stellar, and long-term investors do well to trust it with their savings. In terms of what stocks to add, we’ll discuss it tomorrow but the whole market is your menu, from strong momentum in tech to deep value in other sectors.

To the Moon: [30% cash] + [70% of your favourite stocks]. Who said the bull market is over? Cassandras have been complaining about expensive stocks for months and yet here we are at SPX 4,500. Just keep some cash to buy the dips.

Going Nova: [80% in your favourite stocks] + [20% in crypto]. The way to long-term returns is long-term risk-taking. “No pain, no gain”, that’s the philosophy. You got to keep the pedal to the metal all.the.time. if you want oversized returns. 

The ‘Warren Buffet’: 200% in your low beta stocks. Buffet is not a value investor, he’s a low beta investor. He buys low-vol stocks on leverage, trusting the best US companies not to go bust. Worked well for him for a long time.

Platinum.

 Today is a second entry buy day. 

Platinum.

 

• The silverish-white metal is often used in “catalytic converters” that reduce harmful emissions from fossil fuel vehicles.

• The global platinum market is expected to rack up its largest deficit since the 1970s as the world’s largest producer, South Africa, battles with power outages.

• South Africa accounts for 70% of global platinum output, and its annual production amounted to about 140 metric tons amid shortages in 2022.

• According to The World Platinum Investment Council (WPIC), global platinum demand should surge 28% this year to 8.2 million ounces as more automakers replace expensive paladium with platinum in car catalytic converters.

• Metals Focus added, "With power outages in South Africa limiting supply, the global deficit could increase to 953,000 ounces from 53,000 ounces in 2024.”