The war in Europe has highlighted the importance of having a diversified portfolio of investments.
Diversification means not only diversifying across asset classes, such as stocks, bonds, and real estate but also spreading one investment in a multi-polar world
So, for example, the US, the EU, Japan, Australia, and Canada are in the western sphere.
Russia, China, India, and Dubai are the alternative sphere.
So imagine if you were Russian with all your investments in the western sphere.
Government overreach has resulted in ultra-wealthy Russians having their superyachts, bank accounts, and Mansions seized.
“The war in Europe has highlighted the importance of having a diversified portfolio of investments”
WEALTH TRAINING COMPANY
The rise of government overreach highlights the need to have assets diversified in what is increasingly a geopolitical unstable world
In times of a crisis, war, or economic upheaval government, overreach can become draconian, making diversification not only wise but necessary.
In the UK, during WW2, Italy and German citizens were put in internment camps, for fear of being spies.
Think about it. Today it is the ultra-wealthy Russians that are having their assets seized. You may be ultra-wealthy and be vermontly opposed to your government actions, and your assets are seized.
Even neutral Switzerland has seized 6.2 billion USD of assets. The UK is mulling seizing luxury London properties of ultra Rich Russian and using them to house Ukrainian refugees.
Moreover, in the US snitching on ultra-rich Russians leading to seizes of stolen assets could lead to a 5 million US dollar reward.
“In times of a crisis, war, or economic upheaval government, overreach can become draconian, making diversification not only wise but necessary”
WEALTH TRAINING COMPANY
It is the ultra-rich Russian today, and what if it is ordinary citizens tomorrow, which makes diversification all the more important
The governments ballooning public deficits keep growing. The US Public deficit is now over 30 trillion US dollars, and the state is eager to replenish the state coffers.
The great gold robbery in 1933, when the US government seized all its citizen’s gold in the 1930s entailed forcing citizens to sell well below market price.
So diversification in other jurisdictions outside the Anglo-Saxon sphere might be a good idea.
Russia has some prized commodity companies providing high commodity returns which are selling on the cents. Russian stocks are 90% below compared with the start of the year. So the buy when there is blood on the streets could apply here. But like everything high, potential rewards equals high risk. Dragonian western sanctions could force bankruptcy and trigger a wave of bond defaults. Russia may decide that its prized commodity companies are trading too low and decide to nationalize them.
A tit for tat could also play out when Russia ceases assets from foreigners.
Diversification in China may be a better bet, bearing in mind that Chinese authorities are preparing to give US regulators full access to auditing reports of the majority of 200-plus companies listed. So the fear, uncertainty, and doubt FUD over the delisting of Chinese stocks have been laid to rest.
NASDAQ Golden Dragon China Index has climbed 40% from its lows.
In a changing and politically unstable world, diversification is more necessary than ever, and that can mean not only asset class diversification but also outside your jurisdiction. You don’t know what your government will do next.