You know the old saying, “The more things change, the more they stay the same.” Based on the month of August, if it does not apply to the equity markets, I don’t know what it would. Summer is volatile time, and markets often retreat for any number of reasons. Well it happened in a big way in the first part of August, only to have market participants gradually realize the punishment of far lower stock prices did not necessarily fit the crime of a slowing economy. Investors these days shoot first (sell), and ask questions far later, and with the hysteria of the media and the leverage available at low rates for anyone who manages a portfolio, every asset class is pretty volatile. In this environment, the tried and true strategy of diversification strikes me as wise, depending on who the investor is, their time horizon, objectives, risk tolerance, and a whole host of other specific factors to the individual. There is an old line about spreading money around like fertilizer, a little in a whole lot of different places. A major issue to consider is these days, correlations of asset classes are at an all time high, so if you are trying to diversify you have to look at a lot of different rocks to find negative correlations which fit what you want.
A report on the future of wealth in Asia, which focuses on how China will dominate-http://www.bloomberg.com/news/2011-08-31/china-to-have-half-of-asia-s-millionaires-by-2015-baer-says.html
A story about master investor Andy Beal-http://seattletimes.nwsource.com/html/businesstechnology/2015735942_inpersonbeal22.html
Nice video interview on a founder of Buddy Media, Mike Lazerow, which rode the Facebook wave-http://techcrunch.com/2011/08/30/founder-stories-lazerow-facebooks/
I hope everyone has a great Labor Day Weekend.
As always, on any company mentioned here, past performance is not a guarantee of future returns. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.
Yale Bock, CFA
President, Y H & C Investments