- Playing the ‘Trump effect’ on markets is not easy.
- The “Trump Call” is not necessarily good for all investments.
- As Trump’s pro American and anti-Global trade policies take effect, markets will be volatile like never before.
- Alternative Investments will grow in popularity, and will help balance out the Trump Call on markets.
With the Dow breaking 20,000 investors are happy with stock related investments, which generally are long the market. But the market won’t go up forever, consistently, there will be pullbacks, sell offs – that’s how markets work. Even with the Fed’s quantitative easing program, a Dow that goes straight up is not healthy. But of course, everyone is happy with Dow 20,000.
As an alternative asset manager ourselves, we admit that we are biased. However, we also have a unique perspective into those who don’t hedge, those who don’t invest in alternatives. Our business has an exact opposite correlation with a positive stock market. When the market tanks (that is – really tanks, not just a negative day) like we saw in August of 2015 – our phone rings off the hook. Understandably, 2016 was not a great year for our business. It always baffles us why investors wait until it’s too late to hedge their portfolio.
Originally, the concept of ‘hedge funds’ was exactly that – to ‘hedge’ the market, that hedge funds could buy and sell stocks, and take a position in the opposite direction. But over time, hedge funds just became another tool for managers to execute strategies at their choosing, some for better and some for worse.