The early 2009 bear-market in stocks had also been accompanied by a massive sell-off in bonds. The domestic market’s experience had been paralleled overseas as well.
That was not supposed to happen. When stocks in the past were weak, bond prices had generally shown strength. But in recent years this has not been the case.
Therefore asset allocation did not help in that bear market. Using different asset classes to get high a return at a lower risk was unattainable.
Alternatives to conventional stock/bond formulas to balance market fluctuations are thus not sure-fire answers. But advisers love to recommend a variety with the aid of 20/20 hindsight.
Collectibles are not the answer either, in protecting against market downturns. because of a lack of ready marketability and poor resale margin factors.
Some investors use various combinations of gold holdings. Still others, questionable short-term commodity trading antics.
Over the long run, diversification among different asset classes has produced much higher returns, along with lower risk. ( See the Earl J Weinreb NewsHole® comments.)
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