"Crash-Proof" Investments: How Safe Havens Performed in Our Recent Bear Market
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- čas přidán 2. 06. 2024
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It's been a scary first quarter for stock market investors, and many may have considered selling their positions to enter certain safe haven positions. But as you'll see, these investments may not provide you the insurance you expect against stock market crashes.
This video was sponsored by Skillshare
DISCLAIMER:
This channel is for education purposes only and is not affiliated with any financial institution, although Richard does work as an employee for an investment manager. Richard Coffin is not registered to provide investment advice and as such does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.
Happy Friday everyone! The first 1000 people who click the link will get 2 free months of Skillshare Premium: skl.sh/theplainbagel6
Cool perfect time to invest in yourselves during the lockdown 👍
I have changed nothing with my vanguard index funds investments. I have Added gold platinum silver bitcoin & a few stocks that I'm glad I bought. Amazon Tesla & Netflix.
@@Steven-wq8tx Absolutely. Never stop the new investment into your financial knowledge.
Another recession proof investment is investing in a youtube channel that creates video on safe investments during a recession
Do you know that CZcams Ad Rate is being cut in half after the pandemic began? Ads rate is driven by demand for the ad space, as fewer companies are spending money on ads, the rate drops.
And if you mention COVID-19 or Corona Virus, your video gets demonetized!!!
I wasn't financial free until my 40’s and I’m still in my 40’s, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made. Great video! Thanks for sharing!
Very inspiring! I love this.
I understand that tomorrow isn't promised to anyone, but investing today is hard for me now because I have no idea of how and where to invest in. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.?
@@harrisonjamie794 I invest across the top markets but not by myself though. I follow the guidelines of *PRISCILLA DIANE AIVAZIAN* . you might have heard of her. I can correctly say she's worth her salt as an investment advisor as her diversification skills is top-notch, I say this because I see that in her results as my portfolio grows by averages of 20 to 3O% every month, unlike I can say for my IRA which has just been trudging along. my portfolio just mirrors what she places and not just on some particular industries of my choosing. she gave me that financial freedom I needed
@@georgerobinson2021 Oh, that sounds good but how do I reach out to PRISCILLA DIANE AIVAZIAN?
@@georgerobinson2021 Thank you so much! Found her webpage and left a message. Hopefully, she resp
Bots talking to other bots
One of my favorite investors once said: “During a market crash correlations move towards one”
@Luís Andrade Except it did... Moderately
I would argue that one reason for the initial decline in gold prices was simply the fact that physical gold dealers were closed by lockdown orders, which severely limited buyer access that might've otherwise driven the price up.
That’s a really nice shirt
Thank you Jesus Christ
@@ThePlainBagel This takes the "jesus spoke to me" to another level...
Bitcoin doesn't crash when the market crashes. It crashes on its own terms.
Wrong
This aged like milk.
@@DennisFinancialDoctor where milk?
Awesome content! Today I came across your channel while doing research for an investment power point presentation that I am working on. This is the first channel that I have seen that offers straight, unbiased, truth. You have a new subscriber.
Gold clearly exceeded in keeping its value during the crisis and the coming recession. The reason gold dropped during the market crash was due to allot of recless investors needing to sell off their gold to meet margin calls on leveraged investments. This quickly turned around because of its increasing demand.
Well, you proved that market crash can and will cause gold prices to drop due to this type of sell-off. And one should be aware of it instead of rationalizing that "if not X and Y, the price wouldn't have dropped". Is gold a safer investment during this type of event-driven crash? Probably. Is it crash-proof? No. Is it better than just staying away from the markets for a while? Depends.
@@karolis1
Gold is not considered an investment. Its a means to hold value and escape inflation.
People who have purchased gold for long term possession are not effected by the short term dip of the gold price. Like me allot of them probably took the opportunity to buy more and get some easy profits as a bonus. The fact that gold has repaired its value so quickly compared to the market proves its unique capability to hold value unlike any other asset. INCLUDING MONEY
Thomas Maes
Buying “gold” is like buying cans of sardines and when you open them sand is inside 🤣
@@mcplus5785
Monetary reform could mean allot of things.
But what is probably going to keep happening is the government extending credit to recover the economy. They will do this because it enables them to keep on printing money. I think this is quite dangerous and could cause high inflation. I don't know this will happen for certain, i just know gold is the safer option of the two.
@@mcplus5785
JP morgan has raised the down payment of a mortgage at 20%. This shows you that Americans arent going to be able to borrow as money as before. That's going to effect the American economy enormously. The ability of taking out huge amount of credit is over. So yes economic growth in the foreseeable future is unlikely.
Kudos on introducing a statistical element on correlation, a lot of similar channels just shout their supported product, you actually make an analysis. Keep it up!
Great video! I was really curious about these facts, glad you made a video about them :)
Great video as usual Richard! Loved the way you positioned the sponsor at the end with excel data analysis tab and the video contents...it beautifully dovetailed into the video topic 👍🏻
Made a Skillshare account using your link! Awesome videos. Knew nothing about investing and came to your channel first to learn and boy did I learn. Thanks The Plain Bagel!
Thanks for sharing this video! I'm always learning a lot from the content you put out - very clear and concise information
Lemme appreciate how clear and easily digest your explanation, and the way presentation made in an effective way, and the tone and pace of the speaker himself was that great, even a dumbo like me feels like I can understand finance.
With so many channels trying to sell you on a stock or sponsor... your channel is a breath of fresh air.
I've learned so much from your videos!
Been following your channel since the very beginning! Amazing work. It has really inspired me to start my own channel
Thank you for the motivation and inspiration!
Chaotic Finance you’ve got great content! Subscribed!
Great work. Saw your channel. Good content mate
Thank you! I'll check out your content when I get a chance :)
Thanks for this. I've been agonizing over what to invest in as the non-stock allocation of my portfolio and this answered some questions for me.
I approve the way in which you presented this video's sponsor, good job ! :)
Great pieces of information!!! Thanks for your content!
"The independence of the federal reserve..." hahaha
Independent like fingers on a hand.
Dwayne Cunningham the fed is a joke
@@tommymack3210 criminal is another adjective: Or how about evil?
@Lovecraft so you're glad the Fed exists?
That they pump printed currency into the system? Which gets spent into existence by oligarchs? And they're creating inflation which is a hidden tax on savings?
Okie dokie.
@Lovecraft haha thanks for the tip. :D
that s huge issue that such power held onto such a tiny amount of people. But problem is there is no better alternative. Those people are not perfect beings, so even if they try their hardest to help they will not able to so. Not mentioning the fact that they can also abuse their power . Anyway issue is that there is no better alternative. you losers cry a lot and yet for the past 20 ~30 years you can't offer any better system under which we can live.
I just discovered your channel and am learning a lot. Have you considered doing a video similar to this only analyzing several safe havens over the 2008 crash? I would think consumer staples would have done better then since the COVID lockdown probably hurt retail sales, but that is just a guess.
Thank you for your great videos!
At 9:56 you point out: "And while that doesn't mean that we should take unnecessary risks, or ignore red flags..."
As a relatively new investor, I am interested in what some examples of "red flags". I see a lot of claims of impending doom every day, both about specific stocks and about the stock market as a whole. By now I have learned to just... Ignore them. So it would be very helpful to have some examples about the type of warnings that perhaps I should take seriously.
Thank you for not talking so quickly in these new videos. I am now a subscriber.
Yes, what is a safe haven these days... great to see an overview of what could or should be a save haven in these times.
Cash..
The Truth Inflation
The answer is simple. The best asset for a crash is toilet paper.
The best investment is bribing (oh sorry, "lobbying") politicians, just look how well it worked out for the airlines. :P
My job has solid pay, great benefits, but no 401k or retirment package (its a sucessful but small firm). With watching your videos I opened an Robo Advised Roth IRA. Thanks for the advice and unbias opinion!
Safe heavens: when recession talks, BS walks...
Most safe havens got bogged down by the liquidity crisis we had. They explode after more liquidity is introduce, as in now.
Great vid. Very informative
Great video again!
Marc from the UK.
Can you please cover "Hedging against price fall of physical Gold"?
Thanks.
Great video, very interesting!
Nice work thanks
Thanks mate,good video
Quality stocks... Keep hearing this
Although to a much lesser degree, my bond funds pretty much mimic the stock market exactly. My fixed income allocation provided little protection.
The virus is a blessing. It dropped Tesla stock price low enough for me to grab 16 shares at $400s each. Now it's up again and Im at +5k in profits. Waiting to buy more on the next drop :)
Yeah these kind of events are great for people who can keep their heads straight in a crisis and look for good deals.
U got 10k now
*Great video. Gold initially sold off due to hedge funds covering margin calls. Interestingly, JP Morgan has the largest silver hoard in the world - apparently sitting on almost 700 million ounces of physical silver*
I mean when you consider JP Morgan has total assets of roughly $2.7 trillion, 700 million ounces of silver (or $10.8 billion worth at current prices) is only 0.37% of their total assets.
elmateo77 can you explain what that means they have 2.7 trillion dollars in assets. How are they not the biggest company in the world then?
@@alexanderleo6809 Remember, banks hold money and other assets for other companies. So they're holding 2.7 trillion in assets (money, gold/silver, contracts, property, etc) but they don't actually own all of it. Their market cap is $390 billion. They are the largest bank in the US and the 6th largest in the world (the top 4 are all in China and owned by the Chinese government).
Excellent video Richard. Excellent.
I'd be curious to see how people that use these "safe havens" really end up compared to everyone else that just rides out the storm. If you perpetually keep a large percentage of your asset allocation in them then you're losing out over time. And if you plan to move to gold (etc) BEFORE the inevitable next downturn then you're basically trying to time the market, which is notoriously difficult. Any dip you avoid will be at the cost of any growth you miss before it happens. I guess if you feel confident in the timing of a crash it makes sense but you could also use shorts as a hedge in this case as well. Would be cool to see an analysis of different strategies and in which scenarios each performs better.
Great vid. Wonder if there is a live performance source for the Dalio all weather portfolio. In theory should have been positive after this crash. For Canadians like us, FX considerations are also paramount.
Explained wonderfully well
Love your vids
I loved this video! I wish you included real estate and also REITs! I noticed REITs tended to follow, but I was still curious about real estate properties lol.
Great effort 👌🏼
Very informative. I would like to see a similar comparison for silver as well.
Great channel 👍🏽
Nice summary,.. Gold suffered initially as a liquid asset, in the unseemly scramble for cash as equity markets went into free-fall. Later, it recovered as investors looked around for assets to buffer against the 2.3tn liquidity injection. Gold miners with their high fixed costs can provide a leveraged play on gold moreover
Topic which I like that you should cover in next video : Federal reserve bailouts explantion, what are they and how they works and what could be their side effects.
Hi Rochard, very interesting video as always. Just a question: why would you use correlation instead of the Beta to measure the sensitivity of a stock to the market??
In my opinion beta is an oversimplified measure. It only considers one return figure for each input, ignoring what happens in between point a and point b. Correlation considers all the data points.
Please make a video on “INVESTMENTS RECLASSIFICATIONS”
With bonds your forgetting a big big catch.
Usually at the start of the recession markets forecast a rate cut from the fed, that's maybe what drives up the bond market at beginning before the rate cute - while stocks are falling
Plain Bagel can you do a video on gold mining companies? Thanks.
Talking about correlation a professor once told me in a lecture that a perfect correlation (negative or positive) means that those two variables will surely move towards that direction and if it is not perfect correlation for 0.6 for example it is like that correlation will happen with a lower probability and it was demonstrated with an example on an excel worksheet
Maybe I've got some of it wrong but I'd love if anyone reading this that knows more can explain this.
In this video he's talking about past correlation over a very small time frame. It's just analyzing how the assets were affected by the events that occurred during that time. Even a perfect 1.0 past correlation does not guarantee that two assets will have the same performance in the future, and zero past correlation does not guarantee that two assets won't both drop in value at the same time. There is no reliable way to estimate future correlation (especially since prices are heavily based on investor confidence, so they can be affected by events that have nothing to do with the asset), although we can theorize about how particular events would influence different assets.
Great video
Richard, what about other alternatives investments? Can you tell us what performance they achieve and hat correlation they got? For example, Real state, and REITS, Hedge funds, Art, Jewelry and Gems, collectibles...
Just a quick note on statistics. A correlation coefficient determines the degree of the correlation, and not whether or not there is a correlation. Other tests like Spearman or Pearson are used for that
Great video, we know from the data things like gold only even are only even a hedge against inflation over the very long term. I.e. longer than ones lifetime.
Look up the price of an ounce today and 1990, come back with a changed perspective
@@The_High_SeAs This is based on studies looking at 300 years of data.
Gold is a hedge against inflation of any span of time, it’s true it doesn’t increase in value so investors HATE it, but it’s fantastic for the common folk that don’t want their cash printed away. It also has the benefit of being able to translate value between any currency should that need arise.
However I’m curious, please explain what this 300 year study demonstrated?
Is a 300 year study even relevant today now that our fiat currency isn’t backed by a gold standard anymore?
@@The_High_SeAs From 1990 to today, the price of gold has increased by 429% (from $386 per ounce to $1657 per ounce). During the same time period, the price of the S&P500 increase by 860% (from $334 to $2874). And that's including the drop in stock prices over the last month, before that the S&P500 was up 1014%.
I know where I'm putting my money...
elmateo77 while you are correct in your statement, it’s a complete non-sequitur to the argument that was being had
Return on investment was not the point
The point was does it have more value than 300year more than lifetime long inflation, which you comment also proved it did.
I already stated investors hate precious metals because it’s return isn’t as high, I was never taking part in the stocks vs metals argument
As usual, this video is sober and level-headed, which one much appreciates. I do think, however, that assessing the present relationships over a ~month-long period reveals little: hedges against recession, inflation, et cetera should be tested over a number of years, if possible. Perhaps re-visiting this topic through the years following the initial outbreak of Co.Vi.D.-19 would be interesting.
Thank you very much.
Question, shoudn`t the LT treasury bonds be closer to -1 than ST ones given that they have the biggest gap between the S&P 500 percentage loss and the LT-TB percentage rise? Meaning that their results are the most far away (or contrary) from one another of the samples analyzed.
And tks for the video as always very useful and relevant information!
Hit the nail on the head. I've been pondering these alternatives myself. Except that you forgot one: CASH! Anybody who thinks cash is trash, please send me your trash...
I put some money in a term-deposit-like account in late Jan (not out of any cleverness in predicting a crash, but just happenstance), and of my current investments it is best place I've put my money.
Crash Proof and Recession Proof stocks are great options during market downturns. Hard to find, but they’re out there 👍🚀📈
I saw the writing on the wall and put my $ in teledoc and zoom communications.
How do bonds perform when the Fed decides interest rates go negative?
People spend so much time worrying about hedging crises, but to me it makes a lot more sense to focus on an asset's or portfolio's ability to recover *after* a crash. Instead of gaining when everyone else is losing (and losing when everyone is gaining, which is most of the time), we should just think in terms of maximum loss and recovery time - which, for the S&P, was pretty quick.
Worth noting - over a longer time horizon you can see that the BTC beta drops to near zero.
Interesting fact-check, it'd be great to re-run the numbers one year from now to see how these assets behaved. Because as pointed out with gold, it climbed faster than stocks once the sudden drop was past.
The only way you could have a negative yield bond would be if you bought it with a negative interest rate or if it's an adjustable rate bond, correct?
In my opinion the "flight to quality" effect when investors flock to, safe securities, like Treasuries, in times of market turmoil, reflects a greater concern for return of capital rather than return on capital. Equities will become even more volatile
Think of what is going to happen in late June or early July of 2020 when Americans remove the moratorium on evictions and mortgage payments......and people are evicted or foreclosed on.....real estate revenues and hence investments will tumble and so will the economy......if the government does not support workers by furloughing wages and if Fed removes the "FED Put" , then the shit is going to hit the fan.....if the American economy tanks, so will the Canadian and other country's economies......happy times ahead! ...beware!😀
On the other hand, the USA economy could be saved if the government embarks on a massive infrastructure spending (why not borrow when the coat of capital is near zero?) and it uses the unemployed to build it....In addition to supporting small businesses and their workers..
Hi Richard. Could you please make video about technical analysis and what is the output of academic researches about it? What does the academic community think about it? Does it really work? Or is it all false?
Physical Gold and Silver prices went up around the end of summer
Interesting to watch more than a year later.
hey man awesome video, but your camera was out of focus, a lil bit distracting, cause we cant see your face right
Thank you so much for including Bitcoin in you analysis. I was curious about this myself but it is extremely helpful to to compare my own conclusions against an impartial observer. Unfortunately, this is pretty much the nail in the coffin...
How's bitcoin looking now?
I’d like to see this topic revisited for a high interest rate environment
Can you discuss weather bond funds are good buys
I'm surprised you don't classify Gold as recession proof considering it only lost less than 1/10th it's market value when compared to the SNP500 during a worldwide economic shutdown. I won't be buying it right now, but I certainly will be after the market recovers
Gold indeed lost a lot less value than the index, but recession proof investiments are supposed to increase in value on those times...
5:13 there's a nuance here I think is important: the fact that the US treasury bills are a common standard for government bonds is not because US is seen as the "strongest economy in the world", but because a) the US is the /largest/ economy in the world and by extension b) USD is the de facto world currency; therefore the treasury bills form the largest and most liquid asset market in the world, and it is that liquidity that gives them their value.
A more substantial and rather interesting omission is the obvious one: USD itself! Students of monetary economics and international finance know that USD appreciating during crises is a well-observed pattern no different in the current crisis (due to many factors). In the bottom of the crisis even treasury bills were losing value because investors were rallying away to USD. In real-world terms, it is seen as the most safe and secure asset, beyond niches such as gold or BTC.
Can you make videos related to LEVERAGE in CDF?
.... is it just me? I don’t own gold as a investment, I own gold because of fear and as a insurance. I have a strong belief that one should be prepared for all possibilities.
What about silver? Silver has more utility than gold in material things and its more rare than gold. It hit a low recently but longterm outlook looks as demand will rise and supply is limited.
What tools/ instruments would you recommend to protect us from inflation?
short term treasury bonds
Who is giving this video a thumbs down? Why?
I re-invest the dividends. So, in a market crash I am buying shares more cheaply. However, dividends are often cut during a crash. But, if you sell shares you are often paying capital gains tax. So, there is no easy answer.
hi richard...can i know how much time it takes u to edit these videos..? seems like a lot of work..
For most videos I'm able to keep the editing to my weekday lunch breaks, so about 10 hours minimum per video.
Commenting to improve CZcams algorithm
Gold might be valuable but you need to find someone who will take it as payment. A hospital won't take a chunk of gold as payment. When covid was at its peak no one was looking for gold. They wanted shelter, food, clothes and safety.
I don't think that just because a stock went down as much as the broader market that means it's not safe. Did the companies revenue decrease? Did they cut their dividend? If these things remained the same then I consider that stock to be particularly safe.
Wait, but to me it looks like gold acted like a safe-haven in this case? It only moved 2%. Looking at the table at the end - we have bond-correlated assets, stock-correlated assets, and gold. Gold sits in between.
5:20 but doesn’t this mean it still protected it? just less than other places would and not by enough to stay break black. liquid cash would have been negative by the whole amount of inflation while the bonds are losing a lesser amount?
The definition you gave for correlation is actually a common misconception. A correlation of 1 doesn't mean that assets move up and down together. It means that when one asset produces returns above (or below) it's average, the other asset does the same. Depending on the data that you're looking at, your definition can lead to completely opposite results.
No YC, you're wrong. In financial and statistical fields, correlation is defined as he put it. Same Corr formula in chemistry.
@@capn2k620 If you look at the definition of covariance, you'll see that it refers to the arithmetic mean of the variables. Correlation is based on covariance, so correlation doesn't factor in positive or negative, but only above or below average. The formula for correlation is pretty long, so I won't post it here, but you can just look it up on Wikipedia. Please post a link if you have a different formula.
@@yc2560 Definition from Yale with equation: www.stat.yale.edu/Courses/1997-98/101/correl.htm
Definition from the corporate finance institute: corporatefinanceinstitute.com/resources/knowledge/finance/correlation/
Neither of them mention comparing to the average, which makes sense if you're just trying to determine whether the price of various assets are related.
@@elmateo77 when there's a dash on the x or y in the formula, that's the mean. So x minus the mean of x is comparing the value to the average of all values, just like I said. It's actually explained below the formula in the second link you posted.
What about ordinary bank savings accounts which are guaranteed to a certain amount by the government?
1:41
What about 1918 "spanish flue" influenza pandemic?
@Luís Andrade
That's surprising!
Do you think it had anything to do with the systematic attempt of governments to minimise it?
(war time desception)
I mean the only 'safe haven' investment I know is bonds or stable coin in defi.
hey bagel, perhaps you could do a 5 minute history lesson on the south sea bubble? its basically the quintessential economic bubble
People think commodities are scarce. They are not. They are abundant but often uneconomic to extract. That includes metals and fuels. When prices rise, there is incentive to produce from more expensive extraction points, but when prices are low, you cannot afford to keep the mine or well working. So prices are going to live in a range determined by demand. Most securities pay a dividend, but commodities do not, which means you may be MORE exposed to inflation risk.
Comparing the market cap from gold to Bitcoin makes no sense. If BTC had the same market cap as gold has, it would be another case. Then can we compare both on a bear market.
what if you just short s and p 500 during a big recession like the one thats going to happen i near future?
The more the printing press goes BRRRRRRRR the more my bitcoin and gold go up in the next 18 months 😁.
walmart, pepsico, and cocacola company i think are good stocks for recession times