With inflation skyrocketing, many investors have been ‘de-risking’ their portfolios by investing in safe havens. “I have de-risked my portfolio dramatically. I purchased some real estate, increased my gold, Bitcoin and cash holdings,” disclosed Jay Martin, CEO of Cambridge House. “Without a pocket full of cash, you lack the confidence to chase those higher risk opportunities when they present themselves.”
Martin discussed his outlook on investments with David Lin, Anchor at Kitco News.
With regard to investing in real estate, Martin said that real estate is his safe place. “In all my principal residences, I pay down my mortgage aggressively, but some argue I should capitalize on the cheap debt. I disagree, because I like peace of mind,” he emphasized. “I don’t care how cheap the money is. I like the increased equity in my home.”
Martin spoke about his outlook on gold and whether gold is still considered a safe haven investment against inflation. “There’s 5,000 years of history, the rise and fall of hundreds of empires and thousands of market cycles. Investors should not question the value of owning gold, just because of what has happened in the last 24 months,” he pointed out. “The time horizon and knowing why you own an asset are what really matters. These are the same reasons I prefer to buy property now. Even though housing prices are kind of crazy I don’t plan on trading those. I don’t plan on trading my gold. I don’t own gold for the return. I own it for the peace of mind.”
The nature of ‘Black Swan’ events is that they are unpredictable, Martin said. “I just look around me right now and everybody is angry and so incredibly divided. The equity markets are crazy, volatile, and still overvalued,” he explained. “It’s hard to find anything undervalued in price. The question is what investors should buy, and there’s not many opportunities. I don’t know what that explosion point would be, but the tension to trigger one is everywhere.”
Most economists view U.S. dollar depreciation and spiking inflation currently as the greatest risks for investors. But Martin does not see these risks as the real threats to the economy. “More so than inflation, the supply chain issues are what I focus on. That’s what’s being affected the most in terms of price points. I am more concerned about access to goods than the price of them,” Martin said. “I see the velocity of money continuing to slow down. We are expected to see rate hikes, and that may cool the economy.”
Regarding the potential for war between Russia and Ukraine, Martin said he doesn’t expect this geopolitical conflict to impact the markets. “There’s a ton of hyperbole and sensationalism about it in the market right now,” Martin emphasized. “I work really hard at not getting excited over headlines. When I hear about runaway inflation, the war in Ukraine, the U.S. dollar is going to collapse, crypto is going to pop, I always try to step back and think about what is really going to happen.”
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