There is so much uncertainty in the market – some say we are close to recession, others say it’s a golden period for everything. In spite of such polar opinions, there is still a lot of clarity on how the world and markets are fundamentally moving forward. For example, in 2016 Are we in deflation? & 2017 Deflation Export: New Trend, I wrote on how nationalism will be the main underlying force in economics for the next decade. You can see that the trend continues to take more shape and speed with trade tariff wars and geo-political uncertainties and how military spending is going through the roof everywhere. If globalization was the force for the last 40 years, nationalism could be the force for at least the next 20 years if unchecked.
Imagine what it would mean if China forked out or disconnected from the main global or western supply-chain. That would completely alter the supply-demand curve and could lead to extreme uncertainty and highly imbalanced price movements in different asset classes. The policies of governments are going to play a much larger role. So one thing we can expect for sure is volatility. I will be publishing the right market instruments to capture that – based on the tech research I run – in the next days.
When hedge fund manager Ray Dalio raises comparisons to the 1937 scenario of recession coupled with world politics and war, he is more than right. A wealth gap, low-interest rates and nationalism are all in force. The right question is how people should understand that scenario if it plays out and how we can protect our assets and invest (or divest). Every asset class has to be looked at again – cash, gold stocks, bonds and commodities. All these base instruments are in a totally different context today. I am studying this very carefully based on my research and AI-based data analytics. Commodity prices are especially likely to go for a toss and that is one area where you could see the maximum price movements.
Many of us who have a technology background and use technology to solve many problems in the world wish it could play a role in solving many of the issues that would arise during such periods. Unfortunately, current technologies including artificial intelligence have not really helped with the wealth gap or worldly problems, but at least AI has helped us to understand the issues. Technology can also help us to build social infrastructures in a participatory manner.
These are times for everybody in the world to protect their assets. Cash does not have the same meaning as it used to, and assets are not correlated to their fundamental values as they used to be. It is more than ever the time for being discretionary & selective. I aim to help in those tough decisions!