07/02/2026
Markets in 2026
Have not commented for awhile but read some interesting articles during a volatile week for markets this week with key takeaways for investors.
The financial markets have been supported by Policy Intervention, (GFC, Pandemic etc) but this just raises the bar for systemic risk, as shocks get absorbed without deleveraging/losses...leading to a larger eventual correction (?), when policy makers do not have the ability to continue to intervene?
I have long held that as the fact change so should your portfolio. In this market the set and forget Balanced/ Growth portfolio are not optimized for return but to diversify risk assuming asset classes are not correlated. Maybe they are?
I prefer a more active approach around risk optimization rather than return maximization. Simply put, can I get the same or a better return but with less, say 1/4 of the risk?
Finally Gold. Ignored by many and not part of most portfolios unless the manager bought Newmont or Northern Star as part of their ASX allocation. With all sorts of risk globally in trade and monetary policies, this is a real asset that has been purchased by reserve banks globally, and those who may not have trust in other assets.....note the long queues at Bullion exchanges. We see support for current prices and if we were a producer of gold, with our costs in control, our economic resource expanding (higher gold price = lower grade cutoff) and an increasing price for our product, we would be very enthusiastic about our balance sheet and P&L for the next 12 months
