Top client questions from Ask Titan Anything this week

Happy Saturday! Here are the top questions from Ask Titan Anything this week. As always, reach out to us if you have any questions.

Q: Do we still expect a major leg down for the stock market in 2023?

Like most things in investing, it's tough to give an answer to the question with complete certainty. Our in house view is that the current market volatility we have been experiencing over the last 18 months or so should likely continue. With inflation still running hot, we expect that the Fed will continue in their plans to raise interest rates which may continue to slow the economy. We are defensively positioned in our highest conviction ideas that we believe should provide stability through a period of market fragility. With high levels of cash across all our strategies, we plan to be aggressive with a deep watchlist of companies that are prepped for initiation in the event that stocks move lower.

Q: Current charts show Treasury 10Y-2Y inversion is the largest in four decades; how is Titan bracing for potential impact later this year?

The inversion of the 10s and 2s is where short term interest rates are higher than long-term interest rates is generally a bad sign for risk investments. An inversion of the yield curve highlights that investors want to secure their money for the short term as opposed to seeking long-term returns. An inverted yield curve has predicted the last seven recessions dating back to the 1960s and certainly causes pause in our decision making to go risk on. The big question though: what are we doing about it? Our strategies prioritize investments in companies that generate a lot of free cash flow, and we remain fully hedged with a lot of dry powder to deploy in the coming weeks / months to the extent stocks go lower.  We are defensively positioned in our highest conviction ideas that should provide stability through a period of severe market fragility.

Q: What does it mean when people refer to core real estate?

“Core” real estate strategies generally refer to high quality properties / real estate assets that provide relatively lower, but more stable returns. These kinds of investments are usually located in primary markets (established markets with large population bases and higher GDPs). They’re typically within the main property types – retail, office, industrial and multi-family – are stable, well-maintained, and well-leased. A good example might be an apartment building in New York City. Core real estate is considered the “safest” strategy within the asset class and can provide attractive risk-adjusted returns.

Ask Titan Anything is intended to be informational in nature and does not take into account the specific objectives, financial situation, or particular needs of any specific person. Nothing in this content should be construed as investment advice, or a recommendation to buy or sell securities.