With interest rates expected to continue to rise over the coming quarters and years, and an equities market which has seen its bull run continue for a decade, investors are largely confused as to which asset class may be better to focus on for 2017.
Investors looking at the risk profile of equities may consider the fact that expected global growth rates have been reduced, and equities now have approached levels not seen since before some of the most major stock market crashes in history. That said, analysts and market pundits who have warned of a market crash for the past five years have been wrong, and investors who took the advice that getting out of the market was prudent have given up a significant amount of stock market capital appreciation over time.
Bonds have done well in general since the last financial crisis as rates have continued to decrease, although with rock-bottom interest rates now increasing from all-time lows, investors can expect that bonds will become less attractive in the short-term as waiting for higher rates may turn out to be a more profitable strategy at least over the next year.
Thus, many investors find themselves stuck in the middle where purchasing equities or bonds seem like a bad idea in today’s environment. While I would still lean toward equities, I tend to find myself in this basket of investors, waiting a lot longer for an opportunity than I would otherwise in a different market.
Invest wisely, my friends.
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