Karl, Co Wicklow

A Yes, Warren Buffett is a value investor who also has exposure in businesses that don’t have traded shares. His portfolio tends to throw off a lot of cashflow, which he normally will re-invest in other value equities. However, this year, value equities – dividend-paying companies with low debt and low price-to-earnings ratios have tended to underperform Big Tech. In that regard, Treasury bills offer an attractive short-term home, yielding more than 5pc.

However, in your case, Treasury bills are pure dollar exposure and not suitable to a euro-domiciled investor, given the overvalued nature of the currency. There is no point holding Treasury bills for an extra 1.5pc return over short-dated euro bonds when the dollar could lose 5pc to 10pc in value next year.

The reason the dollar may suffer in 2024 and beyond is that US debt levels are dangerously high and are increasing at an alarming rate, and the amount of fund-raising ahead is going to be a mammoth task. That means rates most likely will rise to attract investors. Consider, also, that the US weaponised the dollar when it confiscated Russian government and private wealth. Other countries have noted that and are no longer as sure about holding dollars or US treasuries. Indeed, there is a move to trade more among themselves. This means fewer participants at US bond auctions, which means we could see a return to money-printing and therefore a lower dollar. I don’t want to be alarmist but given how government spending is out of control in the US, it is possible we will see a major credit event there this decade.

For your part, patience is key when investing so always look to the long term. Timing the market is impossible. We see value investing as the long-term winner and tech as way overvalued. Also, you may consider some diversification into the assets I refer to in the next question.

‘I’m 25 and want exposure in my portfolio to energy stocks but I don’t want to profit from the fossil fuels industry. What can you recommend?’

Q I’m 25 and I understand that energy stocks have rallied recently, and I would like some exposure to the sector over the medium term. However, I do not wish to invest in any company involved in the fossil fuel industry as I’m loath to profit in any way from an industry that contributes to climate change. Can you recommend a strategy for me?​

Malcolm, Co Kildare

A Yes, I can. Firstly, energy stocks are performing well because commodities are very cheap compared to equities and the energy sector is cheap relative to commodities — it’s a double whammy of value. Fossil fuels still account for more than 80pc of energy use worldwide, so we are stuck with them for the foreseeable future. However, it is very easy to avoid the fossil fuel sector and many clients prefer this option.

We believe nuclear is the only scalable green energy, and uranium is in short supply. We started investing in uranium in 2021 and it has returned 300pc since then, rising 65pc this year alone. We still believe there is a long way to go. (We have a paper on uranium, which is available by email.)

Carbon credits are also a great performer. Governments have become reliant on the income they produce and as many companies are set to miss their emissions targets, it is a market that looks set to continue. Carbon credits are a tradable investment and a nice way to get green exposure into your portfolio. They also offer diversification as they are not correlated to any other asset. They have returned 100pc since 2021. Although flat this year, we still expect the price to increase into the future.

If you are happy with mining, silver is a great investment and seriously undervalued. The capex concentrate on technology and investment in commodity production has suffered over the last decade. That is changing, but it will happen slowly, as you can’t just ramp up commodity production given that investment takes time to produce goods. Silver is used in many manufacturing processes, but it is a volatile investment like all commodities, so it should represent a small percentage of your portfolio.

Finally, I would draw your attention to the Sprott Energy Transitions ETF, which is a way to invest in the transition to green energy. Like many investments in this space, the performance has not been that impressive compared to tech or uranium. But is does provide a long-term green opportunity.

When building a portfolio of diverse assets, it’s very important to consider the volatility of each asset and therefore apply the correct weightings. You also need to examine how correlated each asset is to others in the portfolio; for example gold and silver are correlated but silver is three times more volatile, so 15pc of gold is equivalent to 5pc of silver.

Email your questions to g.monaghan@independent.ie