As the saying goes in the stock market…”so goes January, so goes the year in the markets”!
After having a great finish to 2013, year-to-date the global stock markets as of February 6, 2014 are as follows:
Toronto Composite Index: +0.7%
U.S S&P Index: -3.5%
Germany DAX Index: -1.5%
Japan NIKKEI Index: -12.3%
I must admit late last year during the year-end rally I was concerned about my portfolio allocation for clients as I was either equal weight or overweight bonds to equities. Reason being is my goal for clients is to achieve the best risk-adjusted return possible (the lowest risk possible for the best return possible). In addition, clients continue to receive monthly distributions in the form of interest (bonds) and dividends (stocks) which are re-invested to buy additional units of their existing investments (getting paid to wait). Last year, most experts were suggesting dumping bonds and favouring stocks. I was not in agreement and continued to hold the course which I felt was prudent from a diversification and risk perspective.
I enclose a link below to Bloomberg. The article talks about the start to 2014 and how the bond market thus far is outperforming the stock market.
http://www.bloomberg.com/news/2014-01-31/bonds-prove-bears-wrong-in-best-start-since-2008-as-stocks-tank.html
It just goes to show you how nobody can predict the future. All one can do is stick to a given level of risk they are prepared to accept, have a plan if the markets are flat, and having insurance in case the market goes negative.