Listen to Big Dogs
When one of the worlds most prominent investors is raising the alarm it's worth listening
Watch it or just read the takeaways below (Not financial advice as per usual)
Paul Tudor Jones (PTJ) is one of the greatest long standing investors of our time. He has billions under management and has successfully played the equities markets for decades. When Paul speaks, the industry listens!
Takeaways
What would he say to the chairman of the Federal Reserve:
The chairman of the Federal Reserve should look for another job (funny not funny) as this is one of the most challenging environments in the Fed’s history. We are in unchartered financial waters and it hasn’t been this scary since the 70’s
Never seen anything like this (couldn’t think of a worse macro environment)
The levels of overvaluation are incredible
Don’t want to own bonds and stocks (negative situation)
Purchasing power of your money halves in 13 years at just 3% inflation
(we are at 7%+)One should worry about the value of ones money!
TWG View
If we can’t hold bonds and stocks then what else is there? What is the long (bullish) bet and what the heck can we do if you act and sell those vulnerable positions like he’s suggesting.
Likely subliminal message here to :-
Go to Cash - Cash on account ($ £ etc) in the short term is stable
Go to Commodities - Limited supply assets that one needs in everyday life
Go to Energy - Stocks in Oil, Gas, Electricity, Supply etc
Go to Bitcoin - He already owns BTC so take what you will from that (you know we think it’s the best horse in the race)
Running a large hedge fund PTJ will have use of complex financial instruments that he will also lean into that are not available to the average joe. Even so he has basically come out swinging against the institutionally loved model portfolio investment strategy that has 90% of the world’s investors allocating 40-80% of their money into stocks and up to 60% of their money in fixed interest instruments (bonds, government debt etc).
Everybody holds their invested assets in bonds and stocks and PTJ has just told everybody to get out of those positions….
So where does all this money go when the music stops? The dollar initially (it is the world’s reserve currency). Problem with that though is that demand will drive up the value of the dollar and the FED will likely have to start printing again to keep the price down. Gold has always been considered a safe haven. There is also Bitcoin. Despite its volatility a lot of people believe Bitcoin is the only place to safely store your value long term. Even if only a small percent of the worlds terrified money finds its way into Bitcoin we can expect some crazy price action.
PTJ is highly respected in the financial world and no one will just brush off his statements as just the words of an idiot, they will take note. What happens next will likely be a slow slow slow down before the panic kicks in. All that money held in bonds and stocks will rush elsewhere into Cash, Commodities, Energy and maybe even Bitcoin.
Lets see where the chips fall.
Exciting times and as always HODL don’t let volatility shake you out of long term positions
Till next time
The Wealth Gap Team