At a time of increasing asset diversification whose negative backdrop—brought on by the geopolitical crisis—is altering investment decisions, experts are faced with the arduous task of finding opportunities in assets that can adapt to the ups and downs of the market in a climate of uncertainty.
On May 6, Boyar Value Group shared their thoughts on the recent stock market volatility, noting that the selloff was likely driven by many different investor concerns.
The climate of uncertainty has not changed so far this year. The main risks, which are global in scope (the war in Ukraine, the supply crisis, and rising energy costs), have kept investors in an aura of doubt and fear from which it is not easy to emerge.
In the interest of controlling the level of inflation, central banks have been forced to step in. Both the European Central Bank and the Federal Reserve held meetings in the past week.
Ancient Greeks devoted a huge time and effort to solve the squaring of the circle. Ultimately, it was impossible with the means they had but those efforts contributed to make big progress in thought and science.
During the week, panic selling has been the main feature on the stock markets. Worse still is the fat that risk premiums have shot up again, mainly in Italy, raising doubts about whether the country could fall into a debt trap.
When I was young, I loved the movie “The Philadelphia Experiment (1984)”, where several U.S. Marines, in the middle of World War II (1943), traveled through a storm caused by an advanced technological experiment that transported them into the future, to the 1980s. In this context, the movie tells the story of their setbacks in returning to their natural historic moment.
It is a known fact that insurance companies’ balance sheets are, in general, very conservative. The nature of the business requires this, since it must achieve an adequate match between the period and interest rate of liabilities assumed and the investment instruments backing them.
May ended with a slight recovery in riskier asset prices. However, we should not take this as a change in trend.
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