As we are wrapping up the Summer season we have many things looming on the horizon for us. We are all still waiting for a coronavirus vaccine and a return to normalcy. We also have trade wars with China and the upcoming US November Presidential Election. If there was a word to describe our current situation both fiscally and mentally, it would be “volatility”. And while volatility can sound like a scary word, if you know how to ride the waves, an uncertainty in the future can actually be a great thing. To get more on this we went to our head trader at Bullionite, Mukarram Mawjood.
Interviewer - Hi Mukarram! I know you were telling me earlier that your week has been really filled so I will make this a quick interview I promise! I wanted to get your opinion on what the markets are like right now, I know both the readers and I would love to pick your brain for a little.
Mukarram - Yes, thanks for making me stick to the schedule. Ok so the markets are definitely volatile right now, but it is something we saw coming even before COVID. Back in 2018-19 we saw gold peaking and that was our canary in the coal mines for the equity markets and now we are seeing the equity markets really take a hit. Back then, we saw the Dow Jones and S&P500 showing fissures in the market and we started talking about finding alternative places to invest to ease out of stocks. This correction was coming regardless, but the current events of 2020 just really pushed things to extremes.
Interviewer - Wow, so you were actually able to predict 2020?
Mukarram - Well you know how the saying goes, hindsight is 20/20 but yes we were able to predict the current events in the markets to some degree. There always has to be a correction.
Interviewer - So if volatility is good, then we must be in a great place to invest right now?
Mukarram - Yes and no. See there is good volatility and bad volatility or sensible and insensible. Sensible volatility is the one we want and the one we can predict. We can research and look at tables and see when sensible volatility is going to strike the market but with insensible volatility we do not have this luxury. Insensible volatility is when the markets are acting like a two year old child having a tantrum. Part of the reason for the markets acting this way is because of some of the larger events in the world. Mainly I blame it is on factors such as the US printing more money and the way currencies have reacted to this. The US dollar has dropped 10 percent! I would not recommend trading in equities at the moment because these volatilities are tantrums and unpredictable.
Interviewer - What about stocks related to COVID-19 and cures?
Mukarram - There were some vaccine related stocks that were performing well, but since the news with Russian vaccine they have been underperforming. This is not to say to ignore the COVID related trades but they may be very short trades because everything is changing so fast. Just last week, Trump approved the use of plasma for treatment and there are new vaccine and treatment companies coming up. It is important to remember that all of these stocks are heavily weighted and if you don't act quickly, you can take a hit.
Interviewer - Ok one last question and then I will let you go, if equities are looking so risky, what should we do with our investments right now?
Mukarram - Well obviously I like precious metals. Gold is doing great and recently just hit new record highs, like ever record highs, and silver is getting up there too. Silver has just started to move so we are really in a place where the precious metals could help your portfolio; but if you aren't interested in moving to metals then you can also choose to do nothing. There is nothing wrong with money in the bank. I have had some people come to me and complain “oh but I need to have growth every quarter.” and you know, you just don't need to do that. We are in unprecedented times and the volatility currently is not a healthy kind, so we have the risks of losing big. There is no shame in pulling money out and waiting for the markets to normalize. You know your own relationship with risk and now is the time to exercise those opinions. Don't force yourself to invest right now if it doesn't feel right or you are worried you may need the money. We always have time.
Interviewer - Wow, that's great advice to end this interview on. Thank you so much for your time Mukarram!
If you have any questions you would like to have answered reach out to us at info@bullionite.com.