Friday Antifragility

These sorts of memes always crack me up and are fitting for a wild week on the geopolitical front. 

We probably all have thoughts and opinions on what we think is going on, what is being reported as happening and then wading through the aftermath. Where I am most certainly not a geopolitics expert, I'm not going to attempt to interpret what's been going on but trying to observe impacts on capital markets is related to what I do for a living. 

Equities don't seem to be put out, Tuesday decline was barely a blip. This quote from Barron's is useful though. 

That is an environment where bonds don’t hedge stocks as effectively, and where gold offers a hedge against both stocks and bonds, Kelly said. Gold is also more than just insurance: a weaker dollar and higher longer-term rates tied to elevated spending could also push prices higher.

I don't know what will happen next obviously, maybe it's no big deal or maybe it's serious but the quote is a good prompt to remember that there are sometimes signals from other assets. Gold ripping higher is an expression of some sort of concern. The concern may turn out to be unfounded or very serious, again I don't know which is the reason to own something like gold that can add some antifragility to a portfolio. The precise definition of antifragile is benefitting from chaos or disorder. Gold usually fits that bill, client/personal holding BTAL usually does too. 

Defense contractors don't always offer antifragility but they appear to be doing so lately. We've talked about client/personal holding CBOE as a proxy for VIX as tending to go up in the face of escalated market emotion, YTD, yeah just three weeks but still, it's up 10% while the VIX is up a little less compared to 1% so far for the S&P 500. 

The quote also seems to be saying that bonds are less reliable sources of stability to borrow from our conversations about Total Portfolio Approach. I try to be consistent with clients and here about not trying to predict anything but instead being ready, both in the portfolio and emotionally, in case something crazy happens. 

Sometimes we can see things coming and sometimes we can't but being ready ahead of time makes navigating the crazy much easier to do. 

Kind of a heavy post today so I'll lighten it up a little bit. Dogs, bruh.

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