Lumida Ledger on Markets: Strategic Investments for Uncertain Times
Lumida Wealth
Lumida is a digitally native, independent investment advisor specializing in digital assets and alternatives.
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Here’s a sneak peek of what we covered last week:
Markets: Strategic Investments for Uncertain Times
Investing is like poker. No one really know what the future holds. But some hands are pricier than others. Consensus bets are fairly priced.
Defensives - healthcare and utilities are flat to down, YTD. Healthcare was a crowded defensive trade - at the 99th percentile of its historical valuation. Buying into healthcare stocks at the end of last year would have been like buying into a crowded pot.
Non-Consensus bets may mean less downside and potential for upside should the idea become consensus.
Case in point: Energy, small caps, and financials are quietly beating the Nasdaq 100 by 2x this month.
This is a continuation of a trend we saw last month. And no one is talking about it.
Energy and financials are two sectors we’ve been highlighting for several months. Those poker hands were cheap because ‘recession’ was already impounded into prices, and yet these sectors had solid earnings prospects.
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Within energy, one thesis I’d highlight for you is the renaissance of nuclear energy.
The nuclear pendulum was ice cold after Fukushima. Now, we have dozens of reactors going online around in Europe. Even the US is opening a reactor for the first time in decades. We have a presentation at the 1640 Society detailing this thesis in mid-August. And the demands for energy, including boring old hydrocarbons, are only increasing.
We’ll share more soon…
(Read this tweet thread below for more.)
One other tactic: consider buying Mortgage Backed Securities for the Income portion of your portfolio. Mortgages are at ~7% and nearly at all-time wides relative to Treasuries. Unless you believe mortgage rates are going higher, these look appealing.
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Disclaimer: The information is for informational purposes only. It is not intended to be construed as investment advice or a recommendation to buy, sell, or hold any securities. Before making any investment decisions, it is recommended that readers consult with a licensed financial advisor and conduct their own research. Investing involves risk and past performance is not a guarantee of future results.