It’s that time of again, when harried finance editors ask reporters to call investment professionals and cobble together top predictions for the coming year. These are fun to write. But for readers, they’re more entertaining a year later.
Take the late 2010 Barclays Capital Global Macro Survey of more than two thousand institutional investors. The pick for the best performing asset class in 2011 was equities (with 40% support), followed by commodities (34%) and bonds (less than 10%).1 The consensus prediction was a 15% gain in the US S&P-500 for the year to around 1,420.
As we now know, the truth turned out to be rather different. To the beginning of December and using broad indices, diversified fixed income was the best performing asset class of the year, followed by government bonds. Returns from commodities and equities were negative. The year-to-date return for the S&P-500 was close to zero. (And remember, these are the forecasts of big institutional investors.) (more…)
It has been an eventful week in financial markets this week, with the US investment bank, Lehman Brothers forced to file for bankruptcy, Merrill Lynch agreed to being bought by the Bank of America to get them out of trouble and now the US Government stepping in with financial assistance to prevent AIG falling over. Many in the media are already calling the start of this week ‘Black Monday’, combined with another large fall overnight in US markets.
As stock prices have slumped around the world over the past year, investors have been confronted with a barrage of grim news—falling home prices, rising costs for food and fuel, and worries over the fragile health of the banking system. Some have concluded that the current state of affairs bears little resemblance to the past and are questioning the wisdom of maintaining consistent exposure to equities at all.
We don’t know what the future for this business cycle looks like, but we do know that on many occasions in the past, investors were confronted with “unprecedented” events that tested their willingness to maintain a diversified approach. A few examples:
For those interested in webcasts, the link below is a short, two minute webcast that you may find of interest explaining the recent market volatility and managing your investment portfolio during this period.
These questions and answers may assist with any queries you have with regard to the investment market volatility over the last six months and negative performance on your portfolio reports. (more…)
