I can understand why you're skittish. A number of stock analysts feel that this bull market's age (more than seven years old now) combined with somewhat lofty stock price valuations make it vulnerable to a major setback. And given that bond yields are at or near all time lows, many investors see the bond market as a bubble ready to pop.
But guess what? There's always reason to worry that the markets might turn against you just as you're putting your money in. Take stocks. There have been many times during the spectacular run the market's had since its March 2009 low (up more than 200%) that people were convinced that stocks were in for a major setback.
Just recently Brexit, or Britain's vote to withdraw from the European Union, was supposed to lead to a stock plunge. And before that slowing growth in China, the downgrade of U.S. Treasury debt and Greece's debt problems created fears of a major selloff. Even when the market was at or near its bottom in the dark days of the financial crisis, people were more worried that stock prices would continue to fall than they were sure prices were on the verge of soaring.
Related: The problem with putting all your retirement savings in stocks
As for bonds, well, we've been hearing predictions of doom and gloom about them for at least six years. And I'm sure that one day interest rates will rise and bonds will take a hit. But neither I nor anyone else knows when that day will come or how far bonds prices will fall. Besides, while bonds certainly seem risky in that at their current low yields they're especially vulnerable to rising rates, viewed from another angle they may be a lot more valuable than many investors realize. That's because recent data shows that the correlation between stocks and Treasury bonds is at or near its lowest level in 145 years. What that means (without getting into a lot of boring technical stuff about correlation coefficients) is that bonds are more likely to provide at least a bit of a buffer when the stock market takes a dive.
All of which is to say that you can't base your investing on anxiety and gut feelings, or for that matter on investing pundits' prognostications du jour. If you want a reasonable shot at seeing your money grow over the long-term, you've got to come up with a strategy that can thrive in a variety of market conditions and provide decent upside potential while also offering some downside protection.
For the complete article please visit
CNN Money
ABOUT
Dynamic Wealth Research was founded on the principle the world is changing at an ever-increasing pace. The greatest profit opportunities an investor will ever find are from massive, sweeping changes. Dynamic Wealth Research analyzes and closely follows these changes, keeps its readers on the leading edge of them, and shows you how to be best positioned these anxious, interesting, and ultimately profitable times.
