If you’d told me in March that markets would be going to be positive, and hitting all time highs, amidst everything that has happened this year, I would would have laughed. But here we are. Forecasts for global growth are plunging and yet US markets (global markets really), continue to climb higher and higher. Today was no different with most indexes finishing significantly in the green.
Once again Small Caps lead the day while, for the first time in a while, Emerging markets lagged. I have yet to see a good explanation for this continued rally. The closest guess I have seen is that markets are forwards looking, but we don’t know what they are looking at ;).
I don’t pretend to time markets or claim to know when things are going to change, but now does seem like a good time to reiterate the wisdom of having a diversified portfolio. And, yes, I know that over the last decade diversification has been a detriment to returns. Buying the S&P in early 2009 was the best trade in town, but eventually all good things come to an end.
Again, I am not saying markets are going to crash, but I am saying that as markets near new all time highs, it might be prudent to evaluate where you are allocation-wise and see if you actually feel comfortable with it.
In other news, it only took one horrendous quarter for many companies to abandon the idea of ESG, showing that for many firms it may have been more marketing than substance.