How to invest now?

How to invest now?

Good morning. Stocks were boring yesterday. Less boring were Spacs, several of which got slapped down hard. BuzzFeed lost over 40 per cent after its lock-up period ended. The riskiest end of the risk spectrum remains a tough place to be.

Our first section today asks readers to do some scenario analysis and portfolio building. We very much hope you will send us your views: [email protected] and [email protected].

Place your bets on the US economy

When markets are especially uncertain, as they are now, it helps to have a good framework. Here’s a neat one, suggested by Unhedged’s rates guru, Ed Al-Hussainy of Columbia Threadneedle. He proposed a simple but sharp two-by-two matrix, condensed below. Each cell shows an economic outcome that could develop over the next 12 months:

This is, of course, too clean-cut. Outcomes that lie between or outside of the cells are possible. But the four scenarios together capture a wide range of likely outcomes, and can help us plan ahead.

What do you think the probability distribution is of A through to D? (The only wrong answer is 25/25/25/25.) And which of the following asset classes should outperform in each scenario? You can go long or short:

We’d love to hear your