In today’s Money Morning…let’s kick things off by talking about land…the residential market has gone a little nuts…you should pay attention to these sectors…and more…
Welcome to part II of my trade tips for 2021 and beyond.
A quick overview of four sectors or industries that I believe are your best bet to defend yourself from volatility or more. And while this is certainly a more defensive or prudish approach to investing than you’d normally expect from us, that doesn’t make it any less important.
Our goal is, and always will be, to provide you with ideas to make the most out of whatever the market may be throwing at you. So while things may be beginning to look a little bearish out there, that doesn’t mean you can’t still generate wealth during these tougher conditions.
All it really means is that you have to work a little harder to find the standout investments.
Which is exactly what I want to talk about today. Because after covering energy markets yesterday, now I want to move onto two other sectors that I believe you should get familiar with.
So let’s kick things off by talking about land…
Trade Tip #3: Land and agribusiness
Now, when I say land, your first thought may be residential property. After all, Aussie investors are renowned for their love of the property market.
As you’ve no doubt seen or heard of late, though, the residential market has gone a little nuts. Even by Aussie property market standards.
That’s why, when I say to invest in land, I’m talking in a more general sense. With a particular emphasis on farmland and other agricultural investments.
Well, because food will always be a necessary good. But, more importantly, where our food comes from and how it is grown is becoming increasingly important. Factors that are likely to make land and certain agricultural commodities a solid defensive investment.
The tricky part is finding relatively easy ways to invest in these fairly nuanced sectors.
After all, many commodities are traded via options on futures contracts or CFDs — financial instruments that most Aussie retail shareholders either are unaware of or choose to ignore.
And yes, while there are certain ETFs that can bridge this gap, they’re not always ideal either. Leaving the average investor with the option to purely invest in agribusiness stocks. Something that is obviously far riskier than investing in a commodity itself.
Despite these hurdles and challenges, though, I do think you should pay attention to these sectors.
Not only because they have a track record of performing well during inflationary periods, but also because there is a lot of room for innovation.
Food and farming is one of the biggest industries set to be disrupted in the coming years, in my opinion. With developments such as plant-based meats, lab-grown meats, soy-based proteins, regenerative farming practices, and much much more set to upend agribusiness as we know it.
That’s why, this is one trade tip for both bears and bulls…provided you can find the right ways to invest in it.
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Trade Tip #4: Gold and cryptocurrencies
Unsurprisingly, last but certainly not least, I have to mention both gold and crypto. The two assets that are most well known for being categorsied as hedges against inflation.
Gold in particular has long been the best ‘safe haven’ for investors in times of market turmoil.
It has a simple investment rationale, is easy to invest in, and has stood the test of time. And while I’m certainly not the biggest gold bug, even I can admit that it has its place in a portfolio from time to time.
Plus, if you really like gold, you have the option to invest in the plethora of mining and exploration companies. Stocks that offer a higher risk and reward than your average bar of bullion, but trade on a similar thesis.
For that reason, never count out gold when volatility begins to creep into the market.
Crypto, on the other hand, is a little trickier. Because while it has certainly come a long way since Bitcoin [BTC] first launched back in 2009, it is still a somewhat niche investment sector.
Plus, you might be forgiven for thinking that it isn’t the best place to commit your capital, given its recent performance. One look at the recent moves in the price of bitcoin seems to suggest that it has been the biggest loser of all the market jitters of late.
And I’m certainly not going to deny that bitcoin could fall even further if a correction is in the works.
But that doesn’t mean that it is an asset that you should ignore. Quite the opposite in fact, because bitcoin, and crypto as a whole, continues to grow from strength to strength. Proving the doubters wrong every time it falls and rebounds higher.
So while there is certainly no guarantee it will keep doing this forever, I do believe that it has a lot more room for upside gains. Particularly when it comes to the more innovative and experimental projects that aren’t as well known.
Granted, crypto is by far the riskiest asset I’ve talked about across these four trade tips. It is easily the most disruptive, though, as well.
Because if stagflation really is coming, then central banks and fiat currency are likely to be the biggest losers. And that could pave the way for crypto to really take off and offer an alternative to our current monetary mess.
Something that is certainly worth considering if you’re starting to get a little nervous about markets.
Editor, Money Morning
PS: Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.