The next bear market will be “the worst of my life” – here are 3 assets it uses for protection against the 2022 crash – The Hamden Journal
The Santa Claus rally has taken the market to new highs as we head into 2022, but it’s important to remember that stocks don’t always go up in a straight line.
Famous investor Jim Rogers has seen quite a few bear markets over the past half-century, and he’s worried the biggest to date may be just around the corner.
“The next bear market will be the worst of my life,” he predicted in a third quarter interview with financial advisory firm Wealthion.
Granted, Rogers has been bearish in the US stock market for years. But the multimillionaire knows a thing or two about making money in times of turbulence.
Rogers co-founded the Quantum Fund with George Soros in 1973, in the midst of a devastating bear market. Between that date and 1980, the portfolio returned 4,200% while the S&P 500 rose 47%.
Here are three assets he recommends keeping in your wallet to deal with a possible 2022 downturn, even if you’re just sprinkling some of your extra cash on them.
Rogers has long been a fan of commodities, and silver is one of his favorites.
âThe all-time high for silver is $ 50 an ounce; now it’s $ 23. Why can’t silver return to its all-time high? This is the way markets usually work, âhe says.
Investors love money because it can be a store of value and protection against rising interest rates and inflation.
At the same time, it is widely used as an industrial metal. For example, silver is an essential component of solar panels. So, with the increasing adoption of solar power, the demand for the gray metal could be further stimulated.
Rising prices are benefiting miners, so some of the easiest ways to play off an impending silver boom are through companies like Wheaton Precious Metals, Pan American Silver, and Coeur Mining.
Unlike silver, which is trading less than half of its all-time high, copper has hit new highs in 2021.
But Rogers continues to love copper for a very simple reason: electric vehicles.
âAn electric car uses several times more copper than a combustion car, so there is going to be a huge demand for some of these metals that we didn’t have before,â he explains.
âYes, it’s at an all time high now, but electric cars are just getting started. “
As with silver, investors can use copper miners to gain exposure to the metal. Companies like Rio Tinto, Freeport-McMoRan and Southern Copper are well positioned to take advantage of the copper boom.
To be sure, many copper miners have already experienced substantial increases in their stock prices.
If you’re hesitant to jump in at this point, remember that you don’t have to start big. A popular trading app even allows you to buy fractional shares with as much money as you are willing to spend.
Rogers likes agricultural products, like sugar or corn. But this time, he also emphasizes the importance of the farmland itself.
âUnless we stop wearing clothes and eating, farming will improve. If you really, really like it, go ahead and buy yourself a farm and you’ll get very, very, very rich, âhe says.
Indeed, farmland could be a great hedge because it has intrinsic value and has little correlation with the ups and downs of the stock market.
Over the years, farming has been shown to offer higher risk-adjusted returns than stocks and real estate.
The best part? You don’t have to get your hands dirty to get in on the action.
New platforms allow you to invest in US farmland by taking a stake in the farm of your choice. You will earn cash income from rental fees and crop sales. And of course, you will benefit from any long-term appreciation on top of that.
A fourth alternative
There’s another overlooked physical asset that has little correlation to the stock market – and it could offer even greater upside potential: fine art.
Contemporary art has outperformed the S&P 500 by 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no connection, Citi found that the correlation between contemporary art and the S&P 500 was only 0.12 over the past 25 years.
Investing in art by Banksy and Andy Warhol was once an option only for the ultra-rich, like Rogers. But with a new investment platform, you can invest in iconic works of art like Jeff Bezos and Bill Gates do.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.