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Experts Share Suggestions on Allocating $50,000 Amid Market Uncertainty
Asset Allocation Strategies
Amid market uncertainty, investors are struggling with where to allocate their investments. According to CEO and portfolio manager Jay Hatfield, Infrastructure Capital Advisors, a traditional 60% allocation to stocks is suggested. Hatfield recommends a 5% allocation each to Microsoft and Nvidia, 10% to large-cap dividend stocks, 20% to Invesco QQQ Trust, 10% to small-cap stocks, and 10% to the SPDR S&P 500 ETF. Ryan Pannell, Kaiju CEO, suggests allocating 35% to Invesco QQQ Trust, 25% to options trades, 15% to SPDR S&P 500 ETF, 15% to Proshares UltraPro Short QQQ ETF, 5% to iShares Russell 2000 ETF, and 5% cash. While Victor Kuoch, director at Natixis IM Solutions allocates 40% of his portfolio to stocks, 35% to bonds, 15% to options-based strategies and gold, and 10% to cash.
The Suggested Stock Allocation
Kuoch suggests $10,000 into US stocks, $5,000 into European stocks, and $5,000 into Asian emerging market stocks. Hatfield recommends a 5% allocation each to Microsoft and Nvidia, 10% to large-cap dividend stocks, 20% to Invesco QQQ Trust, 10% to small-cap stocks, and 10% to the SPDR S&P 500 ETF. Pannell suggests allocating 35% to Invesco QQQ Trust, 15% to SPDR S&P 500 ETF, 5% to iShares Russell 2000 ETF, and 15% to Proshares UltraPro Short QQQ ETF.
Options Trading to Benefit from Volatility
Options trading is suggested to benefit from both the long and short sides of the market, according to Kuoch and Pannell, who recommend allocating 15% and 25%, respectively, to options. Pannell further suggests allocating funds to S&P Iron Condors, allowing investors to profit from a range-bound market. Wade Guenther, partner at Wilshire Phoenix, recommends using covered call options on applicable portfolio holdings to help generate additional income, hedging against elevated levels of volatility.
Hedging Against Volatility
Investors like Pannell recommend having a coverage reserve for ProShares UltraPro Short QQQ ETF, since the tech market is likely to take an immediate beating during sudden market shifts. The ETF is triple leveraged, so investors can allocate funds a little at a time, instead of immediately exiting other positions.
Investing in Treasuries
Raymond Bridges, Portfolio Manager at Bridges Capital, suggests investing 90% of his portfolio in short-term treasuries until equities realize a repricing in valuation or the yield-curve normalizes. He invests the remaining 10% in large-cap tech, energy, and consumer staple stocks.
In conclusion, it is crucial to allocate funds in various asset classes during market uncertainty. Investors must analyze the market trends and potential risks before making a decision. Allocating funds to stocks, options trading, hedging against volatility, and investing in treasuries are some suggestions that investors can consider.
The market uncertainty brought about by the current pandemic has been challenging for investors trying to allocate resources in asset classes effectively, let alone a new business.
It is essential for new businesses to have a well-defined investment strategy that is rooted in their business plans and performance targets. Thorough market analyses, clear goals, and risk appetite are some of the factors that are crucial when planning an investment strategy for a new business.
To thrive in a volatile market, a new business must allocate resources diversely, investing in different asset classes to spread its risk effectively. Allocating funds to stocks, options trading, hedging against volatility, and investing in treasuries are some suggestions businesses can consider.
Options trading, particularly, can allow businesses to benefit from both the long and short sides of the market. Hedging against market volatility and investing in short-term treasuries are also recommended strategies.
In conclusion, it is essential to have a clear investment plan that aligns with a new business’s goals, risk appetite, and performance targets to navigate the uncertainties of the market, which is crucial to formulating the right allocation of resources to achieve the best results.