Seems like
a ridiculous scenario. Today it’s unthinkable for a ship to leave port
without lifeboats. It’s not that every ship that goes out to sea is
expected to sink, but disaster is always a possibility, so appropriate steps
are taken to protect against that possibility.
So why wouldn’t
we take the same precautions when investing? Traditional investments are
bound by regulation to stay heavily invested in their stated asset class,
regardless of market conditions. In other words, when the ship is sinking,
you’ve got to go down with it (and hope it eventually floats back up
to the surface).
So in a market
beset with potential crises such as rising oil prices, and interest rate
hikes, how do you give yourself the best chance at earning a decent return
while at the same time protecting yourself from a possible market shock?
