Real Value Preservation in Financial Repression – Consequence for Asset Allocation
Our short films on today's monetary and fiscal policy show possible scenarios in the future. These provide ideas on how you can optimally align your asset allocation with your individual needs.
For wealth preservation after deduction of inflation, cash-flow-strong real assets such as shares in companies with solid business models are indispensable. However, these can temporarily fluctuate strongly and not every type of investor has the same level of fluctuation tolerance. Depending on personal starting position or preference, the individual asset allocation looks different. Watch the video to see which trilemma investors currently have to face.
In the last short film, we showed you that negative real interest rates and more financial repression are likely to play a central role in the deleveraging process. This is a direct redistribution from savers to debtors. What does this mean for asset allocation if the goal is to preserve wealth in the medium term after deducting inflation?
The expansionary monetary policy of recent years has mainly favored financial assets, while the real economy has hardly benefited from it so far. Although monetary policy remains expansionary, it is slowly reaching its limits and can only provide limited stimulus. The future is likely to be characterized by expansionary fiscal stimulus. This means high government spending and budget deficits in times of otherwise already high government debt ratios. But how can this debt problem be addressed in the medium term?
You can find part 1-3 of the short films with Jürg Staub under the following link: