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No Silver Bullets

For once, investors have every right to be pessimistic about practically every asset class

Investment analysts and advisors of all kinds are having a tough time dealing with their audience--whether that audience is paying clients or just readers and viewers in the media. Nothing works any more. Equity investments haven’t gone anywhere for close to six years. Now, bonds have also turned volatile. Deposits earn nothing compared to inflation. The time of gold too appears to have gone. Far too many people have money trapped in real estate investments where the value isn’t appreciating and the interest rates are beginning to pinch.

If convention were to be followed then at this point in this article, you would expect me to come up with some advice, some formula that I would claim enables you to sidestep the crisis in investing and earn decent returns. Unfortunately, no such silver bullet exists. As the joke goes, “it’s like this only.” The thing about managing your investments well is that at the end of the day, it only works in a situation where there is a distribution between good options and bad ones. The job of investment management then amounts to avoiding the bad options.

Depending on the circumstances, there might be few good options or there might be more, or there might be options that have a high degree of uncertainty. However, in this country, we are not in a situation where there any options that can be called good with any degree of certainty. In practically every part of the economy, the chickens are coming home to roost. A lot of the usual suspects are mouthing platitudes but it’s hard to see any serious action taking place before the general elections next year. At best, we’ll see some papering over of the symptoms.

So if you want an investment option that will beat inflation and give you some decent real returns while behaving as you might reasonably expect, then there’s nothing. It’s a question of keeping the faith and believing that things have always gotten better in the past and so they will this time too.