Last week in Early Investing, I wrote a piece about how startup valuations are getting a little crazy.
As I’ve discussed here recently, these rising prices have caused me to cut back on startup investing. I’m quite picky these days, and I think that’s the right course of action.
I continue to focus primarily on deals outside of the San Francisco area. Silicon Valley is too competitive and too pricey for my taste. I find much better value outside of California.
But still, finding startup deals at reasonable valuations is difficult. They’re pretty rare these days. Compounding the problem is that most other assets — U.S. stocks, bonds, etc. — are also ridiculously priced.
So I am increasingly looking towards emerging market stocks. I see a lot of value in areas like Russia, which almost no major institutional investors have any exposure to. Some Russian stocks and ETFs I own include VanEck Vectors Russia ETF (RSX), VanEck Vectors Russia Small-Cap ETF (RSXJ), Lukoil (LUKOY), Polyus (OPYGY) and Nornickel (NILSY).
I also continue to be very bullish on commodities such as precious metals, natural gas and oil — gold and silver in particular. I think these assets will be extremely attractive as the world realizes that central banks are essentially stuck between a rock and a hard place. They can’t “ease up” on quantitative easing and low interest rates.
There are $45 trillion worth of bonds in the U.S., and if inflation turns out not to be “transitory,” I think a lot of that money will move into alternative investments. Getting into these alternative assets now means we can invest while prices are still low — and then ride the growth as other investors make the same move later.
Don’t get me wrong, I still love investing in startups. But it’s difficult to find deals at attractive prices today. So I’m looking towards alternative investments.
Have a great week, everyone.