Investment strategy (Gold & recession investments)

Investing / Portfolios
1

Hi everybody,

Following 2 ideas for somebody who wants to start withdrawing/selling stocks from the fire portfolio in around 10-15 years. I state the timeframe as compared to somebody who wants to withdraw 30y in the future the mid term volatility of the portfolio is more important (you dont want to start withdrawing/sell stocks in for example 2001 but rather in 2011).

  1. Idea: In the long term stocks are always better than gold but there were several 10y periods in the last 100y where gold would have resulted in a better portfolio performance as it had a negative correlation to stocks in high inflation period (1970-1980) and during recessions (1930-1940 & 2000-2010). Therefore gold would decrease the risk in case you want to start withdrawing 4%/y and you are in one of this periods.

  2. Idea: Investment strategy, move significant amount of cash/bonds into stocks in case there is a drop of stocks of at least 30% or more. This seems historically like a good idea, as when there was such a steep drop stocks nicely grew in the years afterwards. This implies that the cash is not invested until the drop happens, this strategy is therefore like idea 1 to decrease volatility over 10-15y investment timeframe and not to focus primarily on performance. Is there a fault in the logic?

link to S&P historic chart: https://www.finanzen.net/index/s&p_500/seit1928

1 Like
2

General consensus seems to be the bond tent for handling this risk.

What you describe is a rather random rebalancing approach that might or might not work.

3 Likes
3

makes sense, thanks*

4

So would you start building a tent with something like iShares Swiss Domestic Government Bond 3-7 (CH)?

5

Why would you do that, instead of keeping cash? Aren’t the yield negative?

6

My thoughts exactly. I guess it depends on the climate when you reach that point.

7

Here’s a good comparison of gold performance over longer time frames:

8

looking into part cash and maybe part hedged bonds

9

Hedged bonds should have same yield for comparable risk as local bonds, so not sure it helps.