What
do you do attempting to maintain stock/bond asset allocation
relationships in erratic markets?
The
early 2009 bear-market in stocks had also been accompanied by a
massive sell-off in bonds. The domestic market’s experience was paralleled overseas as well. That was unusual and not supposed
to happen. When stocks in the past were weak, bond prices had
generally shown strength.
Therefore
asset allocation did not help in that bear market. Using different
asset classes to get a high return at a lower risk was unattainable.
Alternatives
to conventional stock/bond formulas to balance market fluctuations
are not sure-fire answers. But advisers love to recommend a variety
with the aid of 20/20 hindsight.
Collectibles
are not the answer in protecting against market downturns.
because of a lack of ready marketability and poor resale margins.
Investors
have been using combinations of gold, silver and other precious metal
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 and @BusinessNewshole tweets.)
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