The stock market has bounced back after a sluggish September, but a billionaire hedge fund manager says it would be a mistake to drop your guard.
Paul Tudor Jones, who runs Tudor Investment Corporation, told CNBC last week that runaway inflation remains “the single biggest threat to financial markets and society in general.”
“If we don’t immediately shift to attack it,” Jones warns, “we run the risk of getting back into the ’70s, where it was the single most important issue for multiple presidents, multiple Fed chairmen.”
Regardless of what the officials in Washington do, you can take action to protect your own portfolio. Here are three assets you can use to hedge against inflation, even if you just sprinkle some of your spare change on them.
Due to their violent swings in value, cryptocurrencies remain a higher-risk solution to the problem of inflation. But more and more investors — including Jones — are getting onboard.
“We’re moving into an increasingly digitized world. Clearly there’s a place for crypto, and it’s winning the race against gold,” he says.
“Crypto would be my preferred inflation hedge over gold at the moment.”
There are many ways to play the crypto boom. For instance, ProShares Bitcoin Strategy ETF holds bitcoin futures contracts that trade on the Chicago Mercantile Exchange.
Investors can also get exposure to Bitcoin through companies that have tied themselves to the crypto market, such as Coinbase, Tesla and PayPal.
Of course, you can also purchase Bitcoin directly. Crypto exchanges often charge up to 4% in commission fees, but some investing apps charge 0%.
Real estate has been a popular inflation hedge throughout history. Not only do real estate prices tend to increase in an inflationary environment, but rental properties can also generate a stable income stream for investors.
These days, however, you don’t need to be a landlord to collect rent checks. Publicly traded real estate investment trusts (REITs) own and operate income-producing properties on investors’ behalf.
Jones happens to own quite a few shares in this sector.
According to Tudor’s latest 13F filing with the Securities Exchange Commission, the hedge fund held stakes in Digital Realty Trust, Public Storage, Kimco Realty, Simon Property Group, Vici Properties and National Retail Properties.
These REITs all offer regular dividend payments with yields higher than the S&P 500.
If you want to follow suit, some popular investing services let you lock in a steady income stream by investing in premium real estate — from commercial developments in L.A. to residential buildings in N.Y.C. You’ll receive regular payouts in the form of quarterly dividend distributions without any headaches or hassles.
This one is often overlooked. But, with inflation on the rise, Bank of America’s chief investment strategist Michael Hartnett said earlier this year that collectibles like wine and art could outperform in the next decade.
Contemporary artwork has already outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
It also helps that fine art has little correlation with the ups and downs of the stock market and the crypto market.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich, like Jones. But with a new investing platform, you can invest in iconic artworks, too, just like Jeff Bezos and Bill Gates do.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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