The effectiveness of alternative investments in the era of geopolitical changes

Abstract

Purpose: The purpose of the article is to identify the volatility of the rates of return, as well as the profitability of investments in precious metals in relation to traditional investments during the unstable epidemic and geopolitical situation, including the identification of the impact of the method of calculating the simple rate of return on investment decisions. Design/methodology/approach: The article uses literature analysis and a statistical research method as research methods. A review of the world literature on the changes taking place on investment markets in the context of the COVID-19 pandemic and the war in Ukraine was carried out. The empirical part of the article presents the results of the analysis of the level of return on metals, compared to traditional investments, in the period 20.03.2018-21.03.2023. Findings: The level of annual rates of return differed from the level of average annual rates of return. Therefore, the conclusions about the profitability of individual investments depend on the chosen method of calculating simple rates of return. Research limitations/implications: This article does not exhaust the examined issue. In subsequent studies, it is worth reviewing the literature not only of the most recent publications, but also of older ones. It is also worth analyzing other types of alternative investments. In future analyses, it is also worth considering the use of statistical tests. Practical implications: Identifying changes in ores markets compared to traditional investment markets and indicating the impact of the simple rate of return calculation method on its value may be useful in making and evaluating investment decisions, as well as in better understanding of the changes taking place in these markets. Originality/value: The paper compares two methods of calculating the rate of return during an uncertain economic situation. The choice of the method of calculating the rate of return affects the results obtained, which translates into investment recommendations. Keywords: rate of return, alternative investments, precious metals, COVID-19 pandemic, war in Ukraine. Category of the paper: Research paper.