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Market Extra: How to invest as inflation, higher interest rates and war roil markets

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Is art, wine or bitcoin
BTCUSD,
+0.06%

a good alternative bet in these uncertain times, particularly as investors in stocks and bonds reel from a bruising start to 2022?

With few corners of financial markets left unscathed by volatility tied to rising interest rates, a surge in the cost of living, and Russia’s war in Ukraine, investors have been looking for places to hide as the Federal Reserve gears up to fight inflation at 40-year highs.

Liz Young, head of investment strategy at SoFi
SOFI,
-6.19%
,
an online personal finance company based in San Francisco, said it’s worth a look for investors to consider unconventional assets, particularly as times have gotten tougher for traditional investments, but they should keep it simple.

“I think, I like to drink my wine,” said Young, in a Tuesday panel discussion hosted by MarketWatch. “I don’t like to invest in wine.”

Watch the full discussion below on investing amid volatility, a part of a two-day MarketWatch video series called “Mastering Your Money.”

Does it make financial sense to bet on wine, art, crypto, meme stocks and more in a tough market?

For Victor Jones, head of global strategy at tastytrade, a financial trading network based in Chicago, it’s all about minimizing downside risk as tighter financial conditions take hold.

“There was probably a group of people who came along in the last two to three years, who were introduced to markets in a world where the cost of capital was cheap,” Jones said. “If you took some risk, the cost of risk was low.”

But now, “the cost of risk is accelerating to the upside,” he said, warning that investors now have begun “paying a tuition” to learn about investing in times of hot inflation, lower liquidity and higher volatility.

Other highlights:

The traditional 60/40 portfolio construction isn’t dead forever, despite this year’s huge correction in bonds, SoFi’s Young said.

Financial innovations, including fractional art opportunities or crypto investing, can give investors ways to hold noncorrelated assets, over a longer horizon, Jones said.

Meme stocks aren’t a thing of the past, according to Jones, but the definition might change. Twitter Inc.
TWTR,
+0.69%

might not be a meme, Jones said, but it’s getting attention with Tesla Inc.
TSLA,
+3.00%

Chief Executive Elon Musk’s roughly $43 billion bid for the social-media platform.

It isn’t all over for technology stocks, but be careful.

U.S. stocks gave up earlier gains Thursday to trade negative, with the Dow Jones Industrial Average
DJIA,
-0.72%

down more than 150 points, at last check, and the S&P 500 index
SPX,
-1.17%

off 0.9%. Yields in the Treasury market marched higher Thursday, with he benchmark 10-year rate
TMUBMUSD10Y,
2.916%

near 2.94%, edging closer to the key 3% level.

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