- Timmer thinks we are in a period of overvaluation in the market, and he has the math to back it up
- There is a place for both bitcoin and gold when it comes to portfolio allocation, he says
Earlier this month at the Bretton Woods: The Realignment conference, Jurrien Timmer, the director of global macro at Fidelity, shared his thoughts on the current state of the market and what asset allocation should look like in a period of overvaluation.
“I think the word ‘bubble’ gets overused,” Timmer explained. “But there is clearly asset inflation, and you can actually quantify that.”
The discounted cash flow model, Timmer said, is showing an inflation of 5 price-to-earning points for the S&P 500. It’s not quite a bubble in Timmer’s view, but it is a clear example of asset inflation.
Timmer, a self-proclaimed traditional asset allocator, is a long-time believer in the 60/40 model, but there is a place for digital assets and gold in a diversified portfolio.
“When I’m thinking about gold and bitcoin, I think of them as different players, but on the same team,” he said.
Gold cannot compete with equities over the long run, but it can compete with bonds in a period of monetary inflation, which is where we are today, Timmer explained. Bitcoin does have an edge in scarcity and network impacts, but both are stores-of-value assets.
Watch my full interview with Timmer below.