Spotlight Growth
No Result
View All Result
Wednesday, February 8, 2023
  • Home
  • News
    • Bio/Med/Pharma
    • Cannabis
    • Commodities
    • Consumer Goods
    • Crowdfunding
    • Cryptocurrency
    • Crypto Cheat Sheets
    • Earnings
    • Entertainment
    • Financials
    • Market News
    • Opinion
    • Politics
    • Technology
    • Venture Capital/Private Equity (VC/PE)
  • Video
  • Stock and Crypto Screener
  • Home
  • News
    • Bio/Med/Pharma
    • Cannabis
    • Commodities
    • Consumer Goods
    • Crowdfunding
    • Cryptocurrency
    • Crypto Cheat Sheets
    • Earnings
    • Entertainment
    • Financials
    • Market News
    • Opinion
    • Politics
    • Technology
    • Venture Capital/Private Equity (VC/PE)
  • Video
  • Stock and Crypto Screener
No Result
View All Result
No Result
View All Result
Home Opinion

With Traditional Stock Safe Havens Overvalued, Can Metals and Treasuries Offer Protection?

by admin
November 12, 2018
in Opinion
0
With Traditional Stock Safe Havens Overvalued, Can Metals and Treasuries Offer Protection?

With Traditional Stock Safe Haven Overvalued Can Metals and Treasuries Offer Protection Opinion Spotlight Growth

As stock market volatility continues to show evidence of underlying uncertainty, many investors are looking for ways to protect prior returns during the next downturn. In these types of environments, investors will generally turn to the traditional safe havens. For the equities space, this includes industry sectors like health care, consumer staples, and utilities.  

But recent trends suggest that the typical safe haven investments may not be the way to go this time around, as the next economic downturn could weigh heavily on the market’s most overvalued assets. Alternatively, exposure to the gold/silver trade or long positions in U.S. treasuries could be preferable given the extremity of the recent market trends impacting valuations.

Source: CBOE Volatility Index (VIX)
Source: CBOE Volatility Index (VIX)

The Chicago Board Options Exchange Volatility Index, or VIX, is generally used to gauge the level of fear present in the market.  Essentially, the VIX is a statistical measure of the potential price fluctuations which may be found in the S&P 500 Index option (SPX) during the next 12 months.  The spikes we have seen during several occasions this year suggests that the optimism may be coming to an end for the longest bull market run in history.

If a true economic downturn is coming, investors will need to locate undervalued assets in order to gain a more protective stance. The health care sector is currently trading at elevated levels (18.2x TTM earnings), while the utilities sector is trading at 17.1x TTM earnings. The consumer staples sector does not look quite so overextended (at 15.1x TTM earnings) but a broader decline in equities suggests that this may not be a viable strategy for defensive investors.

In this case, investors may consider adding exposure to the gold/silver trade or adopting long positions in treasuries. Strength in these strategies may stem primarily from the extent of the prior bearishness in both areas of the market. Gold prices have fallen by more than 36% since they reached record highs in August 2011. The S&P 500 has gained nearly 150% over the same period, and these divergences mark extreme relative to the historical averages. This could make precious metals more attractive in the event of another downturn in the market.

Source: Bloomberg
Source: Bloomberg

Profitable strategies may also be found with trades going long government bonds (given their low historical correlations relative to stocks). Treasuries can offer portfolio protection during an economic slowdown as drops in inflation raise the purchasing power of an investor’s bond payments. In this type of scenario, we can reasonably expect the market to move back into bonds with greater fervor (which could easily drive prices higher from current levels).

Many investors use bonds as a way of generating a steady income stream, since a bond’s coupon payments are guaranteed, but they can also be used to reduce overall risk within your portfolio. When equities begin the next cyclical downturn, inversely-correlated bond instruments offer attractive diversification possibilities which can dampen volatility risks, reduce the potential for capital gains losses, and actually produce gains given the dominant trends currently visible in the market.

Article By: Ric Cox

Tags: alternative investmentsbiopharmaceuticalsbiotechbondscommoditiescommon stockDow Joneseditorialemerging growthenergyflight to safetygoldgovernment bondsinvestinginvestmentmanufacturingmarket newsmarketsmedicalNASDAQnewsNYSEopinionpharmaceuticalsprecious metalspublic companyS&P 500safe havensafetysalessell offservicessilversmall cap companiesSpotlight GrowthSpotlight Growth Stocksstock marketstock market volatilitystock tradersstockstechnology stockstradingU.S. Treasury bonds
  • Trending
  • Comments
  • Latest
Asure Software NASDAQ ASUR Human Capital Management HCM Industry Spotlight Growth

Asure Software (NASDAQ: ASUR) is Expanding to Meet the Rising Demand for Human Capital Management Software

September 27, 2022
OLB Group NASDAQ OLB Cuentas NASDAQ CUEN Partnership Fintech Spotlight Growth

OLB Group (NASDAQ: OLB) and Cuentas (NASDAQ: CUEN) Team Up to Bring Fintech Solutions to Over 32,000 Bodegas Across the United States

October 6, 2022
Siyata Mobile NASDAQ SYTA SYTAW SD7 VK7 Purchase Orders Spotlight Growth

New Purchase Orders for SD7 Rugged Device, VK7, and Other Accessories Boost Siyata Mobile’s Outlook (NASDAQ: SYTA)

December 14, 2021
Telcoin TEL Crypto Spotlight Growth

Telcoin (TEL) Quietly Leads a Crypto Remittance Revolution

June 15, 2021
Cybersecurity Stocks Coming Into Focus Amid High-Profile Attacks

Cybersecurity Stocks Coming Into Focus Amid High-Profile Attacks

0
Safe-T SFET NASDAQ UN Presentation

Safe-T (NASDAQ: SFET) Has Been Selected to Present at the United Nations’ Office of Information and Communications Technology Event

0
Safe-T Group SFET Q4 FY 2020 Financial Results

Safe-T Group (NASDAQ: SFET) Reports Fourth Quarter and Full Year 2020 Financial Results

0
Safe-T Group NASDAQ SFET FY 2020 Prelim

Safe-T Group Ltd. (NASDAQ: SFET) Estimates Record-High Annual Revenues of Approximately $4.9 Million Representing ~50% Growth YoY 2020

0
Innovative Eyewear NASDAQ LUCY Lucyd Lyte 2 Smart Glasses Spotlight Growth

Innovative Eyewear (NASDAQ: LUCY) Debuts Lucyd Lyte 2.0 Audio Eyewear Product

February 7, 2023
American Resources Corporation NASDAQ AREC Reduced Debt By 9 Million Spotlight Growth

American Resources Corporation (NASDAQ: AREC) Reduces Debt by Over $9 Million

February 7, 2023
Its All Greek to Me What Are Option Greeks Spotlight Growth

It’s All Greek to Me: What Are Option Greeks and How Do They Impact Traders?

February 6, 2023
Unleashing the Power of 5G The Future of Mobile Technology Spotlight Growth

Unleashing the Power of 5G: The Future of Mobile Technology

February 6, 2023

Recent News

Innovative Eyewear NASDAQ LUCY Lucyd Lyte 2 Smart Glasses Spotlight Growth

Innovative Eyewear (NASDAQ: LUCY) Debuts Lucyd Lyte 2.0 Audio Eyewear Product

February 7, 2023
American Resources Corporation NASDAQ AREC Reduced Debt By 9 Million Spotlight Growth

American Resources Corporation (NASDAQ: AREC) Reduces Debt by Over $9 Million

February 7, 2023

Categories

  • Bio/Med/Pharma
  • Cannabis
  • Commodities
  • Consumer Goods
  • Crowdfunding
  • Crypto Cheat Sheets
  • Cryptocurrency
  • Earnings
  • Education
  • Entertainment
  • Financials
  • Market News
  • Opinion
  • Politics
  • Real Estate
  • Split Watch
  • Sponsored
  • Store
  • Technology
  • Uncategorized
  • Venture Capital/Private Equity (VC/PE)

Site Navigation

  • Disclosures
  • Terms Of Service
  • Privacy Policy
  • Contact Us

Copyright © 2017-2022 Spotlight Growth. All Right Reserved. Designed by Cool Cat Interactive.

No Result
View All Result
  • Home
  • News
    • Bio/Med/Pharma
    • Cannabis
    • Commodities
    • Consumer Goods
    • Crowdfunding
    • Cryptocurrency
    • Crypto Cheat Sheets
    • Earnings
    • Entertainment
    • Financials
    • Market News
    • Opinion
    • Politics
    • Technology
    • Venture Capital/Private Equity (VC/PE)
  • Video
  • Stock and Crypto Screener

Copyright © 2017-2022 Spotlight Growth. All Right Reserved. Designed by Cool Cat Interactive.

Newsletter Signup

Subscribe to our weekly newsletter below and never miss the latest small/micro-cap analysis and investment news from Spotlight Growth.

Enter your email address

Thanks, I’m not interested