"Crash-Proof" Investments: How Safe Havens Performed in Our Recent Bear Market

TL;DR

Despite claims of being recession-proof, safe haven investments show correlation to stock market during market crashes.

Transcript

this video is sponsored by Skillshare go to SK SH / the plain bagel 6 to get a free 2 month premium trial jury market downturns like what we've seen with co19 it's common to start seeing investors tout the benefits of certain safe haven investments assets they are you are uncorrelated to stocks these investments which include Treasury bills bold an... Read More

Key Insights

• 🏅 Safe haven investments, such as Treasury bonds, gold, and Bitcoin, are claimed to be recession-proof but show correlation to stocks during market crashes.
• 🥹 Treasury bonds demonstrated some safe haven qualities by holding their own and having negative correlations to stocks during the market crash.
• 🚙 Stocks in the healthcare, utility, and consumer staples sectors did not provide protection during the market crash.
• 🏅 Gold had a moderate positive correlation to stocks, indicating a weak safe haven relationship.
• 💦 Bitcoin experienced a significant drop and had a strong correlation to stocks, suggesting it does not offer downside protection during market crashes.
• ✳️ There is no foolproof investment to avoid market crashes, and investors should diversify and consider their risk tolerance.
• 🍉 Short-term volatility can affect even safe haven investments, and quality companies should recover in the long-term.

Questions & Answers

Q: Are safe haven investments truly recession-proof?

No, while safe haven investments may appear uncorrelated to stocks during normal times, their correlation tends to increase during severe market crashes.

Q: How did Treasury bonds perform during the recent market crash?

Treasury bonds held their own during the crash and had negative correlations to stocks, demonstrating some safe haven qualities.

Q: Did stocks in the healthcare, utility, and consumer staples sectors provide protection during the market crash?

No, these stocks saw sharp declines and had near-perfect correlations to the overall stock market.

Q: How did gold and Bitcoin perform during the market crash?

Gold fell slightly and had a moderate positive correlation to stocks, while Bitcoin experienced a significant drop and had a strong correlation to stocks.

Summary & Key Takeaways

• During market downturns, investors seek safe haven investments that are uncorrelated to stocks.

• However, during severe market crashes, the correlation between safe haven investments and stocks tends to increase.

• Safe haven investments such as Treasury bonds, gold, and Bitcoin performed differently during the recent market crash.