Asset Performance Since Global Financial Crisis
In the ten-year anniversary of the Great Financial Crisis (GFC), the US stock market has been the best-performing major equity market by a considerable margin. Part of the reason is that it had a huge fall prior to that and was recovering what had been lost. From the previous high of 2000, China and India have done much better, having maintained a steadier rise all along. Notice that the UK equity market is well down this ranking order despite the index being near an all time high. Also, notice that Gold Bullion and US Treasuries are not far behind the US Equity market whilst Cash and Commodities are relatively weak - a reminder of the unorthodox central bank policies required to ignite the recovery and the disinflationary forces that have ensued since. High yield assets are at the top of the list as investors have been forced to chase yield-generating assets in the low-interest rate environment, oblivious to the long-term risks of owning them. Quantitative Easing and Zero Interest Rate Policies have led to the mispricing of many asset classes, a long way from what was normal. For the US equity market to get back into the old normal range would take a fall of at least 50 percent. We would take some risk off the table now and rebalance portfolios. Between now and late October is the season of maximum risk and minimum reward. We do not want to be fully invested.