The ASX200 went down about 5% after Brexit. A few days earlier, I purchased about $19k worth of gold mining ETFs (ASX: GDX). GDX went up 10% on Friday, so much that it made up for the losses from my other investments in my margin loan account. However, if you add up money in other areas, such as my super fund, my Vanguard funds, and so forth, I’m sure I made a net loss immediately after Brexit. I believe that there is a huge bubble right now in the economy caused by money printing. The economy is fragile because this bubble could pop any moment now, but it’s difficult to know when the bubble will pop. It may take decades before the bubble pops, so you need to have a strategy that allows you to profit when the bubble continues to inflate while also protecting you if the bubble pops.
What I am doing is focusing on dividend income but hedging this portfolio by buying gold mining stocks, gold ETFs, and maybe some government bond ETFs. I am less bullish on bonds because I think that they are artificially being pumped up with printed money. Gold is better as a safe haven asset compared to bonds as bonds are being artificially inflated by central bankers.
In my opinion, we are entering a period of stagnation similar to what we see in Japan where the stock market goes sideways and there is no more growth. We have reached the limits of growth, in fact. Investing in dividends allows you to capture income as the market goes sideways, and if the bubble bursts, gold will protect you. You are covered either way.