We’ve been experiencing some interesting markets lately (although with being in the industry almost 30 years, I’m not sure when there has been a “normal time”!). The Wall Street Journal highlighted in an article recently that we’ve not seen a situation like today since 1984 … a time where:
• Stock market is up over 10% (Dow/S&P)
• Bond market is up (Treasuries)
• Gold is up over 10%
• Oil is up over 10%
(“Stocks, Bonds, Gold, Oil surge in Top Simultaneous Rally in Decades”, Gunjan Banerji, WSJ 10/22/19)
Rarely do the above all move in a similar pattern – normally some markets are up while others are down; thus the rationale for diversification. In times of liquidity, it provides options to take money out of one part of the portfolio that is up while leaving the other part alone. In times of investing, it allows for buying at lower prices in the sectors that are down.
It can feel at times that something may be on the verge of “tipping” – therefore, in times like these make sure you don’t abandon diversification and have sufficient cash reserves for the near term.
Here’s to smooth sailing!