The Right Investment Approach In An Inflationary Environment | Interview With Al Arabiya

May 10, 2022 | 1 min

Al Arabiyah Channel hosted Abdulmohsin Al Omran, Founder and CEO of The Family Office to shed light on interest rates, global market inflation, and the right investment approach to mitigate risk. Below are highlights of the interview:

  • Abdulmohsin has previously warned about prevailing market inflation, resulting first from halting the activities in many economic sectors due to COVID-19. The Russian-Ukrainian war resulted in additional pressure.

  • Interest rate on the 10-year US Treasury bond might rise to 5% year end.

  • One must differentiate between the performance of economies and the performance of markets. The volatility so far reflects investors’ expectation of short-term growth and repricing their risk.

  • The Family Office published an article about the preference for investing in value stocks rather than growth stocks to avoid risk based on a case study on ARK Innovation ETF and Berkshire Hathaway.

  • Al Omran mentioned that growth stocks may offer higher returns, but have higher risk in the future. Despite their lower returns, value stocks usually expose investors to less risk, especially in times of uncertainty.

  • The Family Office invests in profitable companies with solid business plans. The investment is held for followed by an initial public offering.

  • Various American assets are priced based on the 10-year Treasury bond. Thus, as interest rates on Treasury bonds increase, other assets around the world lose their appeal to investors.

  • Abdulmohsin advised investors during the current and upcoming period to invest 20% to 25% of their portfolios in cash, and to expect promising investment opportunities in the upcoming six months.

Watch the full interview above.

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