Billionaire Paul Tudor Jones says you ‘can’t think of a worse environment’ for stocks and bonds – but here’s a simple strategy he’s adopting right now
If you’re thinking about buying discount stocks, you might want to think again. According to Paul Tudor Jones, the billionaire founder of Tudor Investment Corporation, still Not the time to go shopping.
“You can’t think of a worse environment than we have for financial assets,” he told CNBC on Tuesday, adding that “obviously you don’t want to own bonds and stocks. promissory note “.
Instead of aiming for high returns, the hedge fund manager said protect your money should be given priority. But if you still want to investhe suggests an approach that might be worth considering.
“If there is a strategy that I want to adopt right now, if someone puts a gun to my head, I would say simple strategies that follow trends.”
Trend tracking is simply buying an asset when its price is trending up and selling it when its price is trending down. The aim is to capture continuation in price movement.
Let’s look at three ways you might want to apply the strategy in today’s market.
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Energy
Driven by rising commodity prices, energy is the S&P 500’s best-performing sector in 2021, totaling 53% versus the index’s 27% return. And that momentum has continued through 2022.
Year-to-date, the SPDR Fund for Energy (XLE) is up 37%, while the S&P 500 is down about 13%.
XLE aims to track the performance of the energy sector of the S&P 500. If the positive momentum in energy prices continues, an ETF is a good choice to continue to deliver market-leading returns.
There are also more direct ways to track energy items. For example, the United States Oil Fund (USO) offers the price of oil futures contracts and is expected to increase 40% by 2022. The United States Natural Gas Fund (UNG) tracks fluctuations in the price of natural gas and has more than doubled from last year.
Agriculture
In general, economic growth slows, along with soaring inflation not good for financial assets like stocks and bonds. But this may be the right time to examine the agricultural industry.
Regardless of the economy, everyone needs to eat.
For a convenient way to gain broad exposure to the agricultural sector, see the Invesco DB Agriculture Foundation (DBA). It tracks an index made up of futures contracts on some of the most widely traded agricultural commodities – including corn, soybeans and sugar. Funds grow 11% by 2022.
You can also use ETFs to mine individual agricultural commodities. The Teucrium Wheat Fund (WEAT) and Teucrium Corn Fund (CORN) have grown 44% and 35% respectively in 2021.
The Fed is raising interest rates to curb inflation. Higher interest rates increase borrowing costs, which can hurt consumers and businesses. At the same time, a higher rate of return means a higher risk-free rate of return. makes the stock less attractive.
However, if you own investments that are well positioned for a rising interest rate environment, the Fed’s hawkish attitude can be a boon for your portfolio.
It might make sense to look at the ProShares Equities for Rising Rates ETF (EQRR). The fund tracks the performance of the Nasdaq US Large Cap Equities for Rising Rates Index. As the name suggests, this ETF aims to outperform traditional large-cap indices (like the S&P 500) during periods of rising US Treasury yields.
While the EQRR was up only slightly year-over-year, it did significantly reduce the S&P 500’s double-digit percentage decline over the same time frame.
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This article is for information only and should not be construed as advice. It is provided without warranty of any kind.
