Liquid Alternatives: “The Most Hated Stock Rally in History” Proves Pundits Wrong…Again

July 7, 2020 | Liquid Alternatives
https://dailyalts.com/wp-content/uploads/2020/07/screenshot-www.investing.com-2020.07.07-19_53_41.png

The recent rally in stocks is higher on the disbelief scale than even the post-GFC rally that lasted over a decade.

Salvatore J. Bruno, Chief Investment Officer and Managing Director, IndexIQ, makes the interesting point that it is hard to predict how markets will behave around a significant inflection point. Writing in ETF Trends he observes that, as usual, markets were ahead of the curve and discounting an economic recovery that was invisible to economists and analysts.

As this is being written, the S&P 500 is up nearly 45% from its COVID-triggered low of 2190.

“This dramatic upward move in equities appeared to be non-intuitive, taking place in the face of a lot of historically bad data,” says Bruno.

And then, the May jobs numbers proved all the doomsayers wrong. Jobs were up 2.5 million against expectations of a decline of 7.5 million.

But equities were rebounding from as early as March 24. And pundits were still doubting its legs.

Markets wrong-foot the experts

“The point we consistently make here is not that any given rally (or selloff) is, or isn’t, rational; markets often go their own way, disconnected from the economy for periods of time,” writes Bruno. “Rather, it’s that the timing of these things is impossible to predict.”

Therefore, trying to time the markets is usually counter-productive for most investors.

Besides, the current macro-economic environment faces unprecedented events. These include the virus outbreak, the resultant economic damage, and the record stimulus measures undertaken by governments and central banks around the world.

This is, therefore, wholly uncharted territory.

Advice to investors

“What has been demonstrated to work is diversification, and a long-term focus,” according to Bruno. However, even a diversified and long-focus investor can be shaken out in the face of “extreme circumstances and high levels of volatility.”

(The global pandemic brought both).

Liquid alternatives, on the other hand, can provide a measure of stability in an investor’s portfolio at such times.

IQ Hedge Multi-Strategy Tracker (QAI)

According to Bruno, the IQ Hedge Multi-Strategy Tracker (QAI) provides useful diversification and non-correlated asset class exposure through various sub-strategies. These include Macro, Long/Short, Fixed-Income Arbitrage, and Emerging Markets.

“This can help dampen volatility during periods of market stress while providing continued exposure to both stocks and bonds,” advises Bruno.

Related Story:  Waratah Launches Liquid Alternative Mutual Fund With ESG  

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2020/09/online-banking-3559760_640.jpg
FinTech: Ant Bank, The All-New Virtual Bank From Ant Group, Is Live in HK
September 29, 2020     FinTech, News

Hong Kong’s citizens can now look forward to bank with an arm of the largest fintech unicorn in the world. Ant Bank, a part of the Ant Group, has launched…

https://dailyalts.com/wp-content/uploads/2020/09/trees-5605176_640.jpg
Alternative Investments/ESG: New ETFs For ESG Investing From iShares

iShares launched September 24 its new suite of ESG screened ETFs that track S&P 500 sustainability indexes by market capitalization. Investors looking to keep their portfolios with a greater component…

https://dailyalts.com/wp-content/uploads/2020/09/screenshot-www.mosameat.com-2020.09.29-16_33_37.png
Venture Capital: Mosa Meat’s Slaughter-Free Hamburger
September 29, 2020     ESG and Sustainability, News, Venture Capital

Alternative meat startup Mosa Meat, which harvests beef directly from cow cells, rather than raising and slaughtering a whole animal, announced its Series B fundraising of $ 55 million. The…

https://dailyalts.com/wp-content/uploads/2020/09/consensys-2020-featured-image.jpg
Digital Assets: Consensys To Work On CBDC for HK-Thai Cross-Border Payments
September 29, 2020     Digital Assets, News

Consensys is a leading U.S. blockchain technology company specializing in Ethereum blockchain infrastructure and applications for new economic systems. It announced September 25 its win of a contract from the…