Idea One: Avoid downturns by getting out of stocks and into something completely uncorrelated to the market, like a Life Settlement contract. Since these are private transactions that do not trade on an exchange, they are not subject to the value fluctuations seen in those markets. The cash flow is not based on an external economic event, and the actions of other investors in the space don’t have any impact on the performance of your investment asset.
Idea Two: Tax liens are also an example of a completely uncorrelated asset. The valuation and cash flow dynamics are tied to a single property, and follow a time line which is pre-set at the time the lien is issued and sold. Like Life Settlements, expected yields are often much higher than bonds, so the move to avoid the risk of a market downturn doesn’t come at the cost of surrendering on the return front. They make it possible to dramatically lower risk without the proportional decrease in returns that often takes place with other investment alternatives.