The Final Days of 2013
Thanksgiving and the attendant festivities that spill over into the weekend have ended. Now it's a clear shot to Christmas and the end of 2013. Here's where we are now and where we may end up in a month or so.
Stocks: It's been a banner year, despite the usual downdrafts that come with a market in a bull trend. Will we get that "Santa Claus" rally everyone talks about this time of year? Even if we don't, unless there's a crash of some sort, stocks will have been a great story in 2013. And with so many people talking about how valuations are rich, or even that stocks are in "bubble" territory, you have to discount the probability of any sort of big drop simply because too many people are talking about it - not that taking a simple contrarian stance is always a fool-proof position.
Bonds: "Everyone" keeps saying the great bond bull market that began in 1980 is over, so get out of bonds, or at least shorten the duration of your bond portfolio. Such a stand would have minimized losses in 2013, but the great unraveling predicted has yet to happen. Perhaps it's best to remember that even if bonds are finally - and this isn't yet assured - entering a long-term bear market to compare in length and intensity with the 30+ years of the recent bull market, the image of bonds collapsing in a straight downward path is exaggerated...unless, of course, the U.S. dollar itself hits the wall that so many keep saying it will (one of these days).
Gold: Our favored asset in recent years has certainly disappointed. The fall rally, specifically the anticipated run up in November to ease the losses of 2013, failed to materialize. In fact, this November was the worst November for gold in 35 years - which brings up back to 1978, right before gold had the greatest run-up in price in modern history. Makes you wonder...
Cash: Cash remains smashed down, returning virtually nothing. And so it has been since easy money became the mantra of our esteemed central bank, the Federal Reserve. You can't live without cash, but you continue to suffer as you nevertheless prudently hold it in whatever proportion suits your asset allocation. Indeed, a betting man would have to say that cash will remain smashed down for the foreseeable future. The idea that the Fed will tighten - a constant rumor, even in the face of Janet Yellen, an advocate of easy money, takes over the helm of the Fed, perhaps this month - seems far-fetched.
And so our four key asset classes - the ones we favor when we construct a basic asset allocation - forge ahead to the end of 2013, a year where few economic forecasts or investment predictions played out as forecast or predicted - which is perhaps the one sure thing we can count on from year to year.
Stocks: It's been a banner year, despite the usual downdrafts that come with a market in a bull trend. Will we get that "Santa Claus" rally everyone talks about this time of year? Even if we don't, unless there's a crash of some sort, stocks will have been a great story in 2013. And with so many people talking about how valuations are rich, or even that stocks are in "bubble" territory, you have to discount the probability of any sort of big drop simply because too many people are talking about it - not that taking a simple contrarian stance is always a fool-proof position.
Bonds: "Everyone" keeps saying the great bond bull market that began in 1980 is over, so get out of bonds, or at least shorten the duration of your bond portfolio. Such a stand would have minimized losses in 2013, but the great unraveling predicted has yet to happen. Perhaps it's best to remember that even if bonds are finally - and this isn't yet assured - entering a long-term bear market to compare in length and intensity with the 30+ years of the recent bull market, the image of bonds collapsing in a straight downward path is exaggerated...unless, of course, the U.S. dollar itself hits the wall that so many keep saying it will (one of these days).
Gold: Our favored asset in recent years has certainly disappointed. The fall rally, specifically the anticipated run up in November to ease the losses of 2013, failed to materialize. In fact, this November was the worst November for gold in 35 years - which brings up back to 1978, right before gold had the greatest run-up in price in modern history. Makes you wonder...
Cash: Cash remains smashed down, returning virtually nothing. And so it has been since easy money became the mantra of our esteemed central bank, the Federal Reserve. You can't live without cash, but you continue to suffer as you nevertheless prudently hold it in whatever proportion suits your asset allocation. Indeed, a betting man would have to say that cash will remain smashed down for the foreseeable future. The idea that the Fed will tighten - a constant rumor, even in the face of Janet Yellen, an advocate of easy money, takes over the helm of the Fed, perhaps this month - seems far-fetched.
And so our four key asset classes - the ones we favor when we construct a basic asset allocation - forge ahead to the end of 2013, a year where few economic forecasts or investment predictions played out as forecast or predicted - which is perhaps the one sure thing we can count on from year to year.
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