There certainly is enough to worry about.

And there are times when reducing risk is the only prudent thing to do. As we look ahead “risk off” seems a lot better than “risk on” and as the British proverb goes: He who fights and runs away, lives to fight another day.

At Fenestra our first priority is to mitigate risks and preserve capital. Opportunities come and go and we want to be ready when the markets turn.

But this is a time to collect interest and dividends – as John D. Rockefeller said: “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” This is a sad comment and we don’t need to be as mercenary as Rockefeller but at this stage of the economic cycle it is a very important point.

So, safety is what clients need. Remember Facebook and Instagram lost more than 66% of their value in 2022. Tesla lost 75%. Even Apple and Microsoft are down by about a third. And Amazon, the giant in e-commerce and cloud computing, dropped 48%!

The market still hasn’t turned and it keeps sucking investors back in and every time they get burnt. It’s death by a thousand cuts.
The only place to hide in 2022 was cash and rear cash. Obviously with the massive increase in interest rates, the normally resilient and dependable bond market also collapsed.

Last December a 3 month treasury was paying more than 4% interest. The yield on the 1 year and 2-year Treasury bill was also above 4%. This is now a serious alternative to equities. These interest rates have not been available for decades.

So this is the playbook for 2023:

• Collect your dividends and interest payments and turn any unnecessary assets into cash.
• Sell any illiquid and non-profitable shares, i.e., companies at inflated price – earnings ratios that are not generating free cash flow.
• Invest in defensive sectors, income opportunities, safe harbor securities, and cash and rear cash alternatives.
• Constantly research your list of growth stocks, adding research and updating notes so that when the market turns, you’re ready to pull the trigger.
• Consider also investing in Treasury Inflation – Protected Securities (TIPS). TIPS offer excellent yields and further diversification as they will move in the opposite direction of stocks if the inflation rate stays stubbornly high and the Federal Reserve Bank has to raise interest rates further.
• Invest in companies that are the major beneficiaries of the Ukraine War e.g. some Nordic companies will do very well because of the Russian trade sanctions. Some of these companies are well place to generate super profits from the ESG movement and green energy. Also bear in mind that Norway is the world’s 12th largest oil producer and a big exporter of energy alternatives. Norwegian shares are cheap and the Norwegian Krone offers excellent diversion against a depreciating American dollar.
• And be very careful of buying technology stocks.

• If you are not happy with your portfolio performance or would like a second opinion, please do not hesitate to contact Fenestra for a free review of your portfolio.

EXTRAORDINARY PROFITS FROM ORDINARY SHARES * WINNING STOCK MARKET STRATEGIES

If you are not happy with your portfolio performance or would like a second opinion,
please do not hesitate to contact Fenestra on 021 689 7855 for a free review of your portfolio.