What were you doing October 2007? Better, what was your advisor doing? Was your portfolio ready for ensuing storm? Why October 2007 you ask….ahem, for those of you who;
- Are busy and have better things to do
- Still have your heads in the sand due to the carnage of the last Bear Market
- Have hired people to worry about the markets for you
- Have no interest in retiring EVER or amassing any wealth whatsoever……
…the “market,” AKA the Dow Jones Industrials, JUST, this week, broke levels in the market that pre date 2008. So, for the last 5+ years many investors are finally seeing again the statement values they saw back in 2007. What have you achieved in the last 5+ years—more than the average investor’s stock portfolio, I hope. Its time to move on down the road of happy returns—and time to stop looking in the rearview mirror but rather, look forward through the windshield, at the proverbial investing road ahead.
What road are we currently travelling on, and which direction is best to get us from point A to point B? Bottom line, where should your portfolio be positioned for today’s market climate?
Of the 6 Asset Classes we follow; US Stocks, International Stocks, Bonds, Currency, Commodities and CASH (yes, we treat cash as an investment—in 2008 it was the best investment to own!) where is the best place to be? Based on the arm wrestling contest among them all here’s who winning:
- US Stocks
- International Stocks
(Bond investors, beware, as bonds slipped from #2 performing asset class to #3 after a long 10 month run at #2 ….)
Why is this important? The Dow (30 top Industrial Blue Chips traded on the market) has now rallied roughly 120% from its March 2009 low, having taken nearly 4 years to recoup the bear market losses since bottoming and 5 1/2 years since the bull market top was placed. Good time to jump in? Uhhh, March 2009 would’ve been better. However, listen to what our friends at Dorsey Wright and Associates (www.dorseywright.com) have shared; “While the US markets have effectively recouped their bear market losses, the International Equity markets remain well beneath their own late-2007 highs. The MSCI EAFE Index [EAFE] is currently 31% beneath its November 2007 highs. The depth of the fall for International Equities (63%) surpassed that of the 59% peak-to-trough move in the S&P 500, and the recovery has been more muted at 84% from the March 2009 lows.”
So, get your blinker on, and start down International Avenue—the roads ahead don’t promise to be 100% smooth, but avoiding serious travel delays (AKA underperforming asset classes with too much risk) will get you where you are going, safer and quicker. Drive on!