Many Assets Are Winners So Far in 2019 ... So Beware
Uncertainty hasn’t disappeared. Expect savvy investors to shift to a more selective and defensive approach.
What goes up must come down.
Source: Fox Photos/Hulton Archive
Most U.S. investors’ portfolios have registered strong returns so far in 2019 as both risk and risk-free assets rallied nicely in the first half of the year. As data emerge on the performance of different types of investment vehicles, it wouldn’t surprise me if the out-performance were concentrated among those portfolios that not just relied on the less sophisticated asset allocation approaches but also made heavy use of passively managed products.
All this has occurred during a period in which global growth prospects worsened, trade tensions persisted, companies have attracted more regulatory attention, financial system distortions have deepened, and markets have become even more reliant on central banks. It speaks to an unusual combination of economic, corporate and market outcomes that has tended to baffle even the most experienced investors. At its basis is a critical longer-term judgment for investors that has important implications not only for where they invest but also how.