These seven events are not as high profile as the U.S. fiscal cliff and the European debt crisis, but they can just as easily blow apart your portfolio in 2013.
There actually isn’t any way to completely protect your portfolio from every possible scenario, especially as the global economy has so many moving parts to it. American investors can’t just focus on the fiscal cliff and European investors aren’t only concerned with the European debt crisis.
There are plenty of other big risks to markets and the economy that haven’t been as high profile as the two aforementioned events, but they could still affect your investing, according to Business Insider.
The strategists at Bank of America (BofA) wrote on seven lesser-known “tail risks” that are less likely to happen, but could have an “outsized impact on portfolios.” Some risks could even benefit your investments, according to BI.
According to BofA, these seven events may be less likely to happen, but they still have a one in 10 probability.
Here are the seven, plus who benefits and who loses should these events happen. As you’ll see, institutes or investments that would profit from one event are on the bottom for others. For instance, the Swiss franc does well if the 30-years-and-running bond bubble bursts, but poorly if Europe makes a comeback.
Europe makes an economic growth comeback
Winners: U.S. tech stocks, Eurozone periphery debt, European banks and the euro.
Losers: German stocks and the Swiss franc
Wall Street’s collateral crunch intensifies due to regulation
Winners: Short-dated U.S. Treasuries
Losers: Banks and small-cap stocks
U.S. employment really takes off
Winners: Banks, small-cap stocks, value stocks and emerging markets
Losers: Gold, blue chip stocks, growth stocks and bonds
China does a big currency valuation
Winners: Precious metals and debtors
Losers: Emerging market consumers, Asian currencies and emerging market debt
The 30-years-and-running bond bubble bursts
Winners: Gold, the Swiss franc and cash
Losers: Investment grade and high-yield bonds, mortgage-backed securities, municipal bonds, REITs and MLPs
Conflict forces a full-blown Iranian oil supply disruption
Winners: U.S. Treasuries, Russia, Brazil, frontier markets, energy and bonds
Losers: Airline stocks and auto stocks
The U.S. losses its energy advantage
Winners: International hydrocarbon producers, alternative energy and unregulated power generators
Losers: The United States, U.S. refiners and U.S. gas infrastructure
7 Unexpected Events That Could Blow Apart Investor Portfolios in 2013 - Business Insider