Beware of ‘Ostrich’ Portfolios: They Tend to Implode When Interest Rates Rise

By Jon Swyers

You’ve heard of bulls and bears, but most investors are ‘ostriches.’ They hide their heads in the sand until something happens that’s really disturbing. By then, it’s often too late to run away.

Fortunately, our readers and clients are a bit different.

You watch the markets and your bottom line, and take action. We know you don’t want to be an ostrich. So, we offer a simple and elegant solution to a very tough problem - preparing for the coming interest rate hike.

Let’s be clear why preparation is essential. When rates go up, your net worth could take a fast dive whether you own stocks, bonds or mutual funds. You should feel a knot in the pit of your stomach if you own:

• Long-term bonds or bond funds which hold them,
• Stocks in companies heavily leveraged with short term debt,
• Corporate bonds with exposure to credit rating decline, or
• Stock, index funds, mutual funds or ETFs.

There is no pundit or economist who disputes the vulnerability of securities when rates rise. So why aren’t investors more prepared?

The Fed is like the ‘boy who cried wolf.’ We have trouble believing they will raise rates as session after session, including this past September 17th, passes with no change.

Don’t be uncertain, the hike is on the way.

On September 25th, in a speech at the University of Massachusetts, Fed Chair Janet Yellen stated that rates will rise this year to ward off an anticipated return to a 2% inflation rate. Then, she said:

“But if the economy surprises us, our judgments about appropriate monetary policy will change.”

And, we all know what happened next. Last week’s Jobs Report came out. And, the numbers were so pathetic – and previous months’ numbers were revised so dramatically downward – that most every analyst with a voice started pointing to March 2016 as the next plausible opportunity to hike rates.

Nevertheless, they will eventually raise rates.

Are you willing to risk your future on Yellen’s equivocation?

If you remember 2008, you know the anguish of opening a portfolio statement and getting a sudden shock. It took a 67% gain just to make up for the losses in most portfolios. Now, we are all 7 years older. Can we withstand such a loss?

Only an ostrich would ignore the consequences.

Why not convert some of your recent gains into an alternative asset seemingly immune to interest rate changes? An asset that has returned an average of 10% per year for the past 40 years?

This asset went up nearly 32% in 2008 - when the rest of the investment world nearly collapsed!

This asset offers both growth and protection. There are two indices used to measure the performance of these assets. One index, the GB250 Rarities Index, shows its price has never fallen, sporting a Compound Annual Growth Rate of 11.96% per year. The second, the GB30 Rarities Index, shows a Compound Annual Growth Rate of over 10% for the last 40 years, with absolutely NO correlation to interest rate fluctuations.

Look at the steady performance represented by the red line, with no correlation to any other asset. No wonder it is a stated favorite of one of the world’s largest investors and former President of PIMCO, Bill Gross.

Ostriches, raise up your heads!

• You hold this asset with no management fees, no storage fees and an exit strategy which is simple, flexible and known up-front.
• The firm that offers these assets is so confident in their growth potential, that their only compensation is a percent of profits when you sell and make your profit.
• They are willing to wait for that profit until you are ready to sell… even if that takes generations.
• This asset is ranked third in profit-making on the 2015 Knight Frank Luxury Index.
• With this asset, you won’t have to flee good stocks and bonds for fear that interest rates might tank your portfolio.

The asset I am referring to is rare stamps.

Yes, rare, investment-grade stamps.

ASI is the North American Representative for Stanley Gibbons, Ltd., the world’s leading dealer in rare stamps. Stanley Gibbons was awarded the Royal Warrant as philatelist to the Royal Family in 1914–an honor they still hold to this day.

Stanley Gibbons’ experts will hand-pick your rare stamps for your portfolio, as part of the Flexible Trading Program. During a consultation, you will set your goals and objectives, and then we construct a handpicked, one-of-a kind portfolio for you.

How do you get started?

Call ASI at 800-831-0007 and one of our Preferred Client Relations representatives will walk you through the entire process.

Your stamps will be stored and insured free of charge in the Channel Islands for offshore protection; and kept in the most pristine environment. We will gladly help you add to your holdings over time, or sell when you are ready to liquidate.

Call us at 800-831-0007 or send an email with a convenient time to discuss this exceptional asset. Geoff Anandappa of Stanley Gibbons Investments will be visiting our office in Rockville October 22nd and 23rd. He is free for face-to-face meetings or phone consultations during his stay.

Call or email now to reserve your time with Geoff. If you are seriously considering this unique, proven asset class, you want to be sure to take advantage of Geoff’s brief time at ASI.

You will enjoy the education and ASI will enjoy helping you Keep What’s Yours!