Understanding The Impact Of The Economy On Your Investments

Summary

Dieses Video erklärt, wie wirtschaftliche Faktoren wie Wachstum, Rezession, Zinssätze, Inflation und globale Ereignisse die Renditen von Aktien, Anleihen und Gold beeinflussen. Es betont die Bedeutung der Diversifikation in einem Portfolio, um sowohl auf positive als auch negative wirtschaftliche Nachrichten reagieren zu können. Des Weiteren wird ein besonderer Fokus auf Datenschutz durch die App Incog gelegt, die dabei hilft, die Kontrolle über persönliche Daten zurückzugewinnen.

Takeaways

• 📈 Wachstum und Aktienpreise: Eine stärkere Wirtschaftsentwicklung führt nicht unbedingt zu höheren Aktienkursen, da mehr Kapital- und Arbeitseinsatz oft nicht den Unternehmen zugutekommt.
• 📉 Aktien und Wachstum: Aktien sind voraussichtlich und können in Rezessionen zukünftiges Wachstum antizipieren, während Wirtschaftsdaten noch schlecht aussehen.
• 💹 Aktienpreise und Ausgaben: Ein stärkeres Wachstum kann zu einer Ausgabe von mehr Aktien führen, was die Gewinne pro Aktie dilutiert und die Aktienpreise beeinträchtigt.
• 🌐 Wachstum und Unternehmen: Wachstum wird oft von neuen Unternehmen getrieben, die in Aktienindizes oft nicht repräsentiert sind, was den Zusammenhang zwischen Wachstum und Aktienpreisen schwächt.
• 📉 Rezessionen und Anlagemöglichkeiten: In Zeiten von Rezessionen können niedrigere Aktienbewertungen als 'Verkaufs'-Chancen angesehen werden, um langfristig höhere Renditen zu erzielen.
• 🔗 Anleihenrenditen und Wachstum: Es gibt eine langfristige Beziehung zwischen den Zinsen für Staatsanleihen und dem nominalen Wachstum eines Landes.
• 🔄 Anleihen und diversifizierte Anlage: Anleihen und Aktien reagieren auf Wirtschaftsnachrichten unterschiedlich, was zu einer guten Diversifikation beider Anlageformen führt.
• 🌪️ Inflation und Anlagegüter: Ein geringerer Inflationsgrad kann von Aktien problemlos absorbiert werden, aber eine Inflation über 5% kann zu einer Wertminderung von Aktien führen.
• 🏦 Zinssätze und Sektoren: Höhere Zinssätze beeinträchtigen unterschiedliche Branchen unterschiedlich, wobei Finanzen von ihnen profitieren können, während Immobilien und Infrastrukturunternehmen sowie Wachstumsaktien unter ihnen leiden.
• 📊 Gold und Zinssätze: Gold hat in der Regel ein negatives Verhältnis zu den Zinssätzen, da es keine Einnahmen erzeugt und bei steigenden Zinssätzen weniger attraktiv wird.
• 🌐 Globale Wirtschaftsereignisse: Unvorhersehbare globale Ereignisse wie Krisen oder Kriege können den Handel beeinträchtigen und zu einer Zunahme von Handelshemmnissen führen, was die globale Wirtschaft beeinträchtigen kann.

Q & A

Wie wirkt sich wirtschaftliches Wachstum auf den Aktienmarkt aus?

Umgekehrt zu den Erwartungen könnten stärkeres wirtschaftliches Wachstum aufgrund von erhöhten Kapital- und Arbeitseinsätzen zu weniger Aktienmarktwachstum führen, da diese Eingaben den Unternehmen in einem Land nicht unbedingt zugutekommen.

Was zeigt die Beziehung zwischen dem Bruttoinlandsprodukt (BIP) und Aktienrenditen über einen längeren Zeitraum hinweg?

Über einen Zeitraum von einem Jahrhundert hinweg beobachtet, zeigt die Beziehung zwischen dem BIP-Wachstum pro Kopf und den Aktienrenditen in verschiedenen Ländern eine negative Korrelation.

Wie wirkt sich das Wachstum von Aktien auf die Aktionärsrechte aus?

Starkes Wachstum kann zu einer Zunahme der ausgegebenen Aktien führen, was die Gewinne und Gewinne pro Aktie aufdampfen kann, da der Anteil des Aktionärs an den gesamten Reichtümern des Unternehmens abnimmt.

Was ist der Effekt von Inflation auf Aktien?

Ein geringer bis mäßiger Inflationsgrad kann von Aktien problemlos absorbiert werden, da Unternehmen ihre Preise erhöhen können. Bei Inflationsraten über 5% kann dies jedoch zu fallenden Gewinnen und Margen führen, was die Aktienbewertung verringert.

Wie hängt der Zinssatz für Staatsanleihen mit dem nominalen BIP-Wachstum zusammen?

Es gibt eine langfristige Beziehung zwischen dem Zinssatz für Staatsanleihen und dem nominalen BIP-Wachstum in einem Land, wobei ein höheres BIP-Wachstum zu höheren Anleihenzinsen führen kann.

Was ist der Unterschied zwischen dem Einfluss von Wirtschaftsfaktoren auf Aktien und Anleihen?

Akteure und Anleihen reagieren auf Wirtschaftsnachrichten oft unterschiedlich, was dazu führt, dass sie sich im Allgemeinen gut diversifizieren und Risiken ausgleichen können.

Wie wirkt sich eine Rezession auf die Anlagestrategie aus?

Eine Diversifikation der Anlageportfolios, einschließlich Aktien, Anleihen und Gold, kann helfen, den Auswirkungen einer Rezession entgegenzuwirken und sicherzustellen, dass einige Anlageformen auch in schwierigen Zeiten gut abschneiden.

Was ist der 'Golden Butterfly' Portfolio und wie wirkt es sich auf die Rendite aus?

Das 'Golden Butterfly' Portfolio ist eine Anlagestrategie, die ein Fünftel des Portfolios in fünf verschiedene Vermögensgegenstände teilt, was zu weniger volatilen 10-Jahres-Renditen führt und verhindert, dass ein gesamter Jahrzehnt verloren geht.

Wie beeinflussen globale Wirtschaftsereignisse die Märkte?

Globale Wirtschaftsereignisse, wie Krisen oder Kriege, können den Handel beeinträchtigen, da sie Furcht verursachen und zu einer Verkäufe von Aktien und einem Kauf von sicheren Vermögenswerten führen.

Was ist der Einfluss von Zinsänderungen auf Gold?

Gold hat in der Regel einen negativen Zusammenhang mit den Zinsen, da es keine Einnahmen erzeugt und bei steigenden Zinsen, die höhere Einkommen bringen, weniger attraktiv wird.

Was bedeuten protektionistische Maßnahmen für die globale Wirtschaft?

Protektionismus, wie Zölle auf Importe, kann den Handel einschränken und zu einer Verschlechterung der globalen Wirtschaft führen, insbesondere wenn es zu Gegenmaßnahmen und einer Eskalation kommt.

Outlines

00:00

📈 Wachstum und Aktienmarktbeziehung

Dieses Absatz beschäftigt sich mit der unerwarteten Beziehung zwischen Wirtschaftswachstum und Aktienmarktrenditen. Es wird erklärt, dass ein stärkeres pro-Kopf-BIP-Wachstum nicht unbedingt höhere Aktienmarktrenditen bedeutet. Stattdessen zeigt eine langfristige Analyse eine negative Korrelation zwischen den beiden. Der Autor weist darauf hin, dass wirtschaftliches Wachstum oft durch erhöhte Kapital- und Arbeitseinsätze erreicht wird, was Unternehmen nicht unbedingt vorteilhaft ist. Des Weiteren wird die Tendenz, dass bei starkem Wachstum mehr Aktien emittiert werden, was zu einer Verdünnen der Gewinne pro Aktie führt. Auch der internationale Charakter der Unternehmensgewinne wird hervorgehoben, da BIP ein inländischer Indikator ist. Schließlich wird die sogenannte Euphorie-Effekt diskutiert, bei dem bei starkem Wachstum die Aktienpreise überbewertet werden können, was zu einem anschließenden Marktrückgang führen kann.

05:01

📉 Effekt von Wirtschaftswachstum auf Anleihenrenditen

In diesem Absatz wird die Beziehung zwischen nominalem BIP-Wachstum und Anleihenrenditen erläutert. Es wird eine langfristige Übereinstimmung zwischen den beiden in den USA dargestellt, wobei eine Abnahme des BIP-Wachstums zu steigenden Anleihenrenditen führt. Es wird betont, dass Anleihen auf schlechte Wirtschaftsnachrichten reagieren, indem sie Renditen senken und Anleihenpreise erhöhen. Der Absatz unterstreicht, dass Anleihen und Aktien unterschiedlich auf Wirtschaftsnachrichten reagieren und daher in der Regel ein gutes Risiko-Absicherungsinstrument füreinander sind. Allerdings werden Ausnahmen diskutiert, insbesondere in Zeiten starken Inflation oder Deflations, die sowohl für Aktien als auch für Anleihen schädlich sein können.

10:02

🏦 Inflation und ihre Auswirkungen auf verschiedene Anlageformen

Dieser Absatz behandelt die Auswirkungen von Inflation auf Aktien, Anleihen und Gold. Es wird eine historische Datenreihe seit 1871 in den USA präsentiert, die zeigt, dass alle drei Anlageformen Inflation übertroffen haben. Es wird jedoch darauf hingewiesen, dass es ratsam ist, eine Diversifikation vorzunehmen, da es nicht immer garantiert ist, dass Aktien die Inflation überwinden können. Bei sehr hohen Inflationssätzen kann der Aktienmarkt einbrechen, während Anleihen und Gold in solchen Zeiten bessere Performer sein können. Außerdem wird die Tendenz, dass Anleihen in Zeiten von Deflation besser abschneiden, diskutiert, da fallende Preise ein Zeichen einer kranken Wirtschaft sind.

15:03

📊 Zinssätze und ihre Auswirkungen auf Aktien, Anleihen und Gold

In diesem Absatz werden die Auswirkungen von Zinssätzen auf verschiedene Anlageformen analysiert. Es wird erklärt, dass der Einfluss von höheren Zinssätzen vom Sektor abhängt, in dem die Aktie tätig ist. Finanzdienstleistungen könnten von höheren Zinssätzen profitieren, während Sektoren wie Immobilien, Versorger und Wachstumsaktien eine negative Auswirkung erfahren könnten. Für Anleihen wird eine subtilere Wirkung beschrieben, bei der steigende Zinssätze zu fallenden Anleihenpreisen führen, aber langfristig durch neue Anleihen mit höheren Coupons den Einkommenswert erhöhen können. Für Gold wird eine allgemeine negative Beziehung zu Zinssätzen beschrieben, da Gold kein Einkommen generiert und in Zeiten steigender Zinssätze weniger attraktiv wird.

20:03

🌐 Globale Wirtschaftsereignisse und ihre Auswirkungen auf Anlagen

Dieser Absatz diskutiert die Auswirkungen globaler Wirtschaftsereignisse auf die Anlageperformance. Es wird betont, dass Furcht durch Krisen zu einem Verkauf von Aktien und einem Kauf von sicheren Vermögenswerten wie US-Treasury-Anleihen, UK-Gilts und Gold führen kann. Es wird auch die Bedeutung von Handelsrichtlinien und geopolitischer Stabilität für die globale Wirtschaft hervorgehoben. Handelskriege und geopolitische Instabilität können zu wirtschaftlichen Problemen führen, insbesondere wenn Länder, die zusammenhandeln, in Konflikt geraten. Eine Diversifikation der Anlageportfolios wird als Mittel zur Absicherung vor diesen unvorhersehbaren Ereignissen empfohlen.

Keywords

💡Wirtschaftswachstum

Wirtschaftswachstum bezieht sich auf die Steigerung der Wirtschaftsleistung eines Landes innerhalb eines bestimmten Zeitraums. Im Video wird diskutiert, dass ein stärkeres Wirtschaftswachstum paradoxerweise nicht immer zu einem Anstieg der Aktienkurse führt, da es durch erhöhte Kapital- und Arbeitseinsatz erreicht werden kann, was die Unternehmen in einem Land nicht unbedingt vorteilhaft ist. Ein Beispiel dafür ist die negative Korrelation zwischen dem pro Kapita-BIP-Wachstum und dem Aktienmarktrendite, die im Video anhand eines Jahrhunderts langen Datensatzes dargestellt wird.

💡Rücksichtslosen

Der Begriff 'Rücksichtslos' wird verwendet, um die Tendenz zu beschreiben, dass Investoren in Zeiten starken Wirtschaftswachstums oft zu viel für Aktien zahlen, was zu einer Überbewertung und später zu einem Einbruch führt. Das Video erwähnt Japans beispielhaftes Wachstum in den 70er und 80er Jahren, das zu einer großen Euphorie und einer Überbewertung von Aktien führte, die schließlich in einer schlechten Leistung endete.

💡Bonds

Bonds, auch Anleihen genannt, sind Schuldverschreibungen, die Unternehmen oder Regierungen ausgeben, um Kapital zu sammeln. Im Video wird erklärt, dass es eine langfristige Beziehung zwischen den Zinsen für Staatsanleihen und dem nominellen BIP-Wachstum eines Landes gibt. Das Video zeigt, wie die Zinsen für US 10-Jahres-Bonds seit 1960 dem nominalen BIP-Wachstum der Vereinigten Staaten folgen.

💡Inflation

Inflation bezieht sich auf die allgemeine Steigerung der Preisniveaus von Gütern und Dienstleistungen über die Zeit. Im Video wird gezeigt, dass sowohl Aktien, Anleihen als auch Gold im Laufe der Zeit Inflation übertroffen haben. Es wird auch diskutiert, wie Inflation die Bewertung von Aktien beeinflusst, wobei eine Inflationsrate von etwa 2% bis 3% die höchsten Bewertungen für Aktien ergibt, aber eine zu starke Inflation zu einer Verringerung der Aktienbewertung führt.

💡Zinssätze

Zinssätze sind die vom Zinsempfänger für das geliehene Kapital in Geld erhaltenen Prozente. Im Video wird erklärt, wie Zinssätze die Werte von Aktien, Anleihen und Gold beeinflussen können. Ein Beispiel ist, dass der Finanzsektor von höheren Zinssätzen profitieren kann, während der Immobiliensektor, der Infrastruktursektor und Wachstumsaktien negativ beeinflusst werden können.

💡Gold

Gold wird im Video als eine Anlageform beschrieben, die in Zeiten von Inflation und Unsicherheit oft als Zuflucht und Wertspeicher gilt. Es wird erwähnt, dass Gold in der Regel ein negatives Verhältnis zu den Zinssätzen hat, da es kein Einkommen erzeugt und daher weniger attraktiv wird, wenn Zinssätze steigen und Anleihen höhere Renditen bieten.

💡Diversifikation

Diversifikation bedeutet, dass man sein Investment in verschiedene Vermögensgegenstände, wie Aktien, Anleihen und Gold, verteilt, um Risiken zu minimieren und langfristigen Erfolg zu maximieren. Im Video wird betont, wie wichtig Diversifikation ist, um sowohl auf wirtschaftliche Schwankungen als auch auf globale Ereignisse vorbereitet zu sein.

💡Rezession

Eine Rezession ist eine periodische Abnahme der Wirtschaftsaktivität, die normalerweise durch einen Rückgang des BIP um mindestens 1,5% über zwei aufeinanderfolgende Quartale definiert wird. Im Video wird erläutert, dass Rezessionen schwer vorherzusehen sind und dass Diversifikation helfen kann, um den Auswirkungen auf das Investmentportfolio entgegenzuwirken.

💡Globale Ereignisse

Globale Ereignisse wie Kriege, Pandemien oder geopolitische Instabilität können die Märkte erheblich beeinflussen. Im Video wird erklärt, wie solche Ereignisse die Nachfrage nach Gütern und Dienstleistungen sowie den internationalen Handel beeinträchtigen können und wie Diversifikation hierbei hilfreich sein kann.

💡Schutzbrief

Ein Schutzbrief ist ein Angebot, das von Incog in dem Video erwähnt wird, mit dem man die Kontrolle über seine Datenprivatsphäre zurückerlangen kann. Es ermöglicht es, persönliche Daten vor dem Kauf durch sogenannte Datenhändler zu schützen, was im Kontext der Diskussion über Datenschutz und finanzielle Sicherheit relevant ist.

Highlights

Economic growth and stock market performance often show a negative correlation historically.

Increased economic growth can lead to more capital and labor inputs, potentially not benefiting companies directly.

Stocks are forward-looking, whereas GDP is a backward-looking measure, causing a discrepancy in their relationship.

Strong GDP growth can lead to more shares being issued, diluting profits per share and affecting stock prices.

GDP growth is domestic, while company profits are often international, especially for large exporting companies.

Entrepreneurial spirit drives GDP growth but may not be reflected in stock indices focused on established companies.

Euphoria during strong GDP growth can lead to overvaluation of stocks and subsequent underperformance.

Contrarian investment approach can be beneficial during recessions, as stocks may be undervalued.

There's a long-term relationship between bond yields and nominal GDP growth.

Bonds and stocks are driven by different economic factors, leading to a diversification benefit.

Incog app helps users regain control over their data privacy by suppressing data broker access.

Diversification with assets like stocks, bonds, and gold can mitigate risks during recessions.

Inflation's impact on investments varies; stocks, bonds, and gold have historically beaten inflation.

High inflation or deflation can negatively affect stock valuations and bond prices.

Interest rates influence different sectors of the stock market in varying ways.

Bonds are affected by interest rate changes, with new issues compensating for initial price drops.

Gold typically has a negative relationship with interest rates due to its lack of income generation.

Global economic events, such as crises, can lead to market fear and affect investment choices.

Trade wars and protectionism can disrupt international trade and impact the global economy.

Geopolitical instability can affect commodity prices and pose risks to the global economy.

Diversification is key to managing risks in an unpredictable economic environment.

Transcripts

there's a wealth of global economic data

but as investors it's difficult to

understand how the economy affects our

investments in this video I describe the

effect of growth recession interest

rates inflation and also Global events

on stocks bonds and gold this should

help you to navigate the investment

landscape with a better understanding of

the economic fundamentals this video is

sponsored by incog an app that helps you

take back control of your data privacy

let's begin by looking at economic

growth and how it affects the stock

market naively you might expect that if

economic growth is strong it creates

strong demand for goods and services

that pushes up profits at companies

which in turn drives up their stock

prices well in fact what we observe is

the exact opposite so if we plot GDP

growth per capita for various countries

over a long period of time and this is

over A Century of data that you can see

here

and we plot that versus return on stocks

in that country we actually observe a

negative correlation in other words more

per capita GDP growth means less growth

in the stock market the author of the

paper Ritter points out that the

increased economic growth comes from

increased inputs of capital and labor

and that doesn't necessarily benefit the

companies in a country so that was

comparing between countries over a long

period of time what if we were to look

overtime for a particular country and

look at the relationship between GDP

growth and the increase in stock prices

well here again the relationship is not

what you'd expect because GDP is

fundamentally a backward-looking measure

whereas stocks tend to be

forward-looking for example if you buy

at the worst point in a recession stocks

will already be looking through the

darkness to the light of future recovery

whereas economic data will still look

very poor indeed but beyond this obvious

lag effect there's another point which

is to do with slippage and this was from

a paper by Bernstein and arnut where

they point out that if there is strong

GDP growth what tends to happen is that

more shares are issued and that means if

you look at the profits per share

earnings per share then that actually

gets diluted overall for an entire

market so while overall there's greater

riches in the economy you don't

necessarily share in those riches

because of this dilution of your

ownership another point is that GDP is a

domestic measure whereas profits for

companies tend to be International

particularly if it's dominated by some

exporting large caps so that also

weakens the link between domestic GDP

growth and the profits and share price

growth of stocks another point is that

GDP growth is strongly driven by new

companies this is the kind of

entrepreneur IAL Spirit of the country

so while that does Drive GDP growth you

won't necessarily get exposure to it if

you buy that country stock index

remember that that will be heavily

weighted towards the older more

established and successful companies in

the country and then finally there's

also the effect of euphoria that you get

when GDP growth is strong for example

people tend to overpay for stocks when

that's the case for example if you look

at the incredible GDP growth in Japan in

the 70s and ' 80s that led to a huge

bout of euphoria and it led people to

overpay massively for Japanese stocks

and then inevitably there was the bust

that followed and stocks underperformed

as a result so if anything the way you

should be thinking is as someone who's a

contrarian if you do see that there's a

recession and that pushes down the

valuations of stocks look at that as a

sale an opportunity be forward looking

and expect things to improve it's

difficult to do it at the time because

all you'll hear is bad news but that way

you can generate higher returns longterm

now let's turn to the effect of economic

growth on bonds and bond yields now

there's a long-term relationship between

the yield on bonds government bonds this

is and the ninal GDP growth in a country

so that's not adjusted for inflation so

for example if you look at us 10-year

yields going back to 1960 notice how

they tend to track roughly what happens

to GDP growth nominal GDP growth in the

United States now after 2020 when we

switched the economy off and switched it

back on again the level of GDP went

deeply negative then strongly positive

and now what's happened is that it's

Fallen back down to a sane level of

growth but notice what's happened to

10-year yields they're rising up to meet

falling GDP so the situation we find

ourselves in now and in the scatter plot

the Red Dot is where we are as I make

this video you can see that the two are

roughly in line with each other nominal

GDP growth would suggest a yield for

10-year bonds of around 4.3 to

5.5% and the actual yield is 4.6

implicitly what this relationship means

is that bonds feed on bad economic news

so if growth is expected to be low that

pushes down yields and it pushes up bond

prices but the key Point here is that

what drives bonds and stocks are

different economic factors they tend to

respond in different ways to good and

bad economic news and this is why stocks

and bonds tend to diversify one another

quite well most of the time although we

will see an exception in a moment

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description below how about a period of

negative economic growth or a recession

well the difficulty here is that very

few of us can see these recessions

coming some people claim to be able to

but it's usually not true so what can we

do to prepare for that well one way to

prepare for it is to be Diversified if

you have assets in your portfolio like

stocks bonds but also gold that respond

in different ways to economic news then

even if there's a recession at least

some of them will be performing well so

if we have a 100% stock portfolio and we

look at every 10-year return since

1970 notice that there were periods

where an entire decade was lost these

are decades that started in the 1970s

and in the early 2000s so 100% stock

portfolio in a given country tree will

be subject to these periods of

underperformance how about if we

diversify across different types of

stocks but also different asset types

one portfolio which does fairly well

through good times and bad is called The

Golden Butterfly created by Tyler who

created the portfolio charts website

which is where this data is from this

portfolio is called The Golden Butterfly

because if you plot the pie chart of its

allocation it looks a little bit like a

butterfly but notice how it's very very

simple it simply allocates a fifth of

your portfolio to five different things

the total stock market small cap stocks

long-term bonds short-term bonds and

gold and now what we see is that the

returns tend to be less volatile for

these 10-year periods there is no

10-year period when the return was

deeply negative so while the highs

aren't as high as they would be for 100%

stocks you also don't get those really

awful decades which would put you off

investing Al together now let's turn to

inflation and see how it affects stocks

bonds and gold if we look at the period

since 1871 in the United States and I

plot the returns of stocks the S&P 500

but also 10-year treasuries and gold and

have also shown inflation over this

period all three of those Investments

beat inflation and if we look at the

increasing rates of return gold has the

lowest return then we get us 10-year

bonds and then we get stocks with

respective returns of 3.2% per year for

gold 4.6% per year for treasuries and a

very respectable 99.1% per year for

stocks so certainly if you want to beat

inflation long term stocks have been the

way to do it historically however it's

unlikely that we're going to live long

enough to see these long-term trends in

some cases so this is why it's not a bad

idea to have some

diversification because it's not always

the case that stocks can beat inflation

if we plot the valuation of stocks this

is using Robert Schiller's Cape measure

versus the rate of inflation on the

x-axis we get this kind of peaked shape

where the highest valuations are for a

rate of inflation of around 2% to 3% but

notice what happens if inflation really

increases a lot what we get is dting the

valuation multiple of stocks Falls as

people lose confidence in stocks to a

certain extent stocks can weather

inflation because what companies can do

is simply raise their prices to match

price increases but at a certain point

customers will not be willing to pay

ever higher prices and this means that

profits fall and margins fall and stocks

derate so a small amount of inflation

can be easily absorbed by stocks but

once it gets too high Beyond about 5%

then it becomes a problem similarly in

deflation when prices are falling year

over-year that usually is a symptom of a

sick economy with very little demand for

goods and services and again what

happens here is at stocks D rate so here

what we'd expect to do well in a period

of deflation would be government bonds

now what we saw recently in 2022 was

that inflation surged and at the same

time stocks and bonds fell

simultaneously in other words this

hedging Rel relationship where bonds

tend to cushion losses in stocks broke

down completely as both fell together

and historically we've been here before

we saw it in the

1970s you can see in this data here from

schroers that when inflation is high the

correlation between stocks and bonds

increases and that's because as we saw

High inflation is toxic for stocks they

derate and because with bonds you're

locky in a fixed rate of interest a high

inflation rate is like Kryptonite for

bonds as well so in a period of really

high inflation gold here may be useful

in your portfolio another asset which

holds up surprisingly well would be

things like money market funds which

although they're quite boring don't

necessarily lose a lot of value and

that's because they're not lock you in a

fixed rate of interest for a long period

of time they've got very short duration

so here again depending on the inflation

regime that we find ourselves in and

remember it's not predictable then

diversification helps us because

different assets respond to inflation in

different ways now let's turn to the

effect of interest rates on those three

assets stocks bonds and gold starting

off with stocks the effect of higher

interest rates depends on the sector

that the stock is in different

Industries will be differently impacted

by higher rates of Interest financials

which make some of their profits from

lending actually may benefit from higher

interest rates whereas other sectors

that require borrowing in order to boost

their returns and the classic example is

real estate would be negatively impacted

by higher interest rates and a higher

cost of funding utilities companies also

tend to be heavily reliant on low cost

of funding to fund their infrastructure

and growth stocks also rely on cheap

funding to grow their revenue so all

three of those sectors would be

negatively impacted in contrast sectors

like Health Care communication services

and consumer staples are much less

heavily dependent on funding and would

probably hold up much better if interest

rates do increase if we turn to bonds

the effect here is slightly more subtle

because what you'd expect to happen is

if interest rates increase then by

definition yields will be increasing and

prices would fall that effect would be

immediate so if you've got a bond in

your portfolio already or a bond fund

the price of that fund would fall

straight away and the longer the

duration of your fund or your bond the

more the price would fall but then what

happens is more nuanced and takes longer

but because newly issued bonds will have

a higher rate of interest baked in that

increases your income as yields rise so

the initial shock is bad it pushes the

price of your fund down but the longer

term effect is a positive one which is

that newly issued bonds enter your

portfolio and push up your income you

can see that in the case of this fund

which is issued by Vanguard it's vov

it's a guilt fund it buys UK government

bonds notice how in 2022 its price

tanked as yields shot up but then what

we see slowly over time is if you look

at the dividend payments which are

monthly for this fund they gradually

increased over time as new Bonds were

bought by the fund with higher coupons

in the case of gold It generally has a

negative relationship with interest

rates because it doesn't generate an

income itself and if you can buy

treasuries which do generate an income a

higher income when rates increase then

it'll become less attractive as an

investment particularly as it's quite

volatile whereas bonds tend not to be if

they're fairly short duration in

pensioncraft we've got a fair value

model for gold which we give to our

members and this is available on our

website but this has three drivers one

of them is the level of inflation

because as we saw gold does tend to

track inflation long term but the other

factors would be the value of the dollar

the trade weighted dollar because the

price of gold is measured in dollars and

a weak dollar pushes up the price of

gold and the model also includes real

yield so when yields are high that tends

to push down the price of gold so here

is that model right now and you can see

that the price of gold is overvalued by

about 14% as I make the video and if you

want to have access to this and other

tools that come with our premium website

membership just go to our website

pensioncraft tocom finally let's

consider global economic events now some

events create fear and this would be

some kind of Crisis it could be a war

and these are fundamentally

unpredictable and these affect markets

because when people are scared they tend

to sell their stocks and buy safe things

which in this case would be things like

us treasuries UK guilts and other

developed Market government bonds but

also people tend to flee to things like

money market funds and gold if there is

a severe economic event such as a

pandemic then it affects things like

demand for goods and services but also

things like International Trade now the

biggest players in international trade

are primarily three countries no

surprises that China's top of the list

but the US and Germany are also

considerably higher than the rest of the

world when it comes to the value of

their exports so Chinese exports in 2022

were about $4 trillion the US was about

$3 trillion and Germany was about 2

trillion then the next highest Falls all

the way down to 1 trillion and that's

the UK which exports a lot of services

but it's when this trade breaks down

that you get real problems and what

we've seen recently is a lot more talk

of protectionism where a country puts

tariffs onto its Imports in order to

protect its domestic producers now if we

look back in time tariffs were much more

common in the past than they are now

both in terms of size but also the

number of countries which imposed them

here you can see data for France the UK

and the US and all three of them had

very high tariffs for a very long period

of time notice how following the Great

Depression tariffs fell out of favor

many people pointed the finger at

tariffs for worsening that huge economic

depression which was Global in scale

then we had organizations like the World

Trade Organization which was designed to

allow free trade and to create a kind of

Level Playing Field but the narrative

has changed noticeably recently because

there's a growing feeling in developed

countries that China is abusing its role

as an exporter by subsidizing its

companies and subsequently under cutting

price in developed markets particularly

for high value added and technological

Industries for things like electric cars

but also electronics and this is why

first the Trump Administration now the

Biden Administration have hugely

increased tariffs on imports from China

in May of 2024 for example tariffs on

things like electric vehicles from China

were increased to 100% by Biden now

there are hardly any Electric Car

Imports to the US anyway so this is more

of a preventative measure to allow the

US Electric Vehicle industry to really

get off the ground and this is because

China has pretty much beaten them to

that game but also other key Industries

things like semiconductors but also

solar cells have also had these tariffs

imposed now the problem is that if you

go back in time to the 1930s say if you

look at something called the smooth hly

tariff initially it actually made things

look better it had the desired effect

which was to slow down Imports and favor

domestic producers of things like

agricultural Goods however What followed

was retaliation from other countries and

those were very severe such that the

US's exports also were cut so the

consequence was that a world that was

already scarred by the Great Depression

fell into an Ever greater slump

hopefully that won't happen this time

because these tariffs are very surgical

they're very focused in certain sectors

but who knows if it does escalate then I

suspect the impact will be negative but

if we go back to that beg of Thy

Neighbor type of tit fortat response

then we could all be poorer as a result

another problem is geopolitical

instability because if trade does break

down countries which trade together tend

not to go to war against each other so

if there is a breakdown of trade I think

there's a greater risk of geopolitical

instability and as we saw with Russia's

invasion of Ukraine what happened as a

consequence of that breakdown of trade

and that's because countries imposed

sanctions against Russia was that energy

prices surged a lot of countries such as

Germany Hungary Poland the Czech

Republic were heavily dependent on

Russia for their supply of natural gas

so geopolitical instability particularly

from commodity producers can be a huge

problem for the global economy

unfortunately it is unpredictable but

here again diversification can help you

to some extent for example if you don't

have a 100% stock portfolio and there is

fear due to a global trade War then at

least some aspects of your portfolio

will do well and of course there's a

possibility of an allout War for example

there's a lot of worries at the moment

about what's going to happen in the

south China see and whether China May

invade Taiwan if that happens then this

could escalate into a global conflict so

again having some Safe Haven Assets in

your portfolio like gold like cash like

short-term government bonds will protect

you if that happens so I hope this video

has helped you understand how economic

factors can drive the returns in your

portfolio but also why it's important to

be Diversified because if you are then

at least some aspects of your portfolio

will be able to weather whatever the

economy throws at them now don't forget

our offer from incog you can take back

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which is pension and as always thank you

for listening