Market Sell-Off Update: Why Diversification Matters

Back

Market Sell-Off Update: Why Diversification Matters

Before the recent sell-off, the S&P 500 was more overvalued than the beginning of 2000 (when looking at price-to-sales ratio). This market sell-off is also different than that of 2000. Here we have seen all parts of the market sell-off initially. In 2000 this was not the case. There were places in the market that held up and a general sell-off did not occur until later (2002).

Today we are starting to see a divergence between markets. One example of divergence is in emerging markets. Although emerging markets are down since September 30, 2018, they have significantly outperformed US stocks in this sell-off. Also having uncorrelated assets in the portfolio, like gold, provide a much needed diversification benefit.

Recent News

US Stocks Disconnect from Earnings

When buying a stock, you are investing in the future of the company. Historically a stock price is highly correlated to earnings growth. If earnings grow, the stock increases and vice versa. What we have seen in the past decade is that many US large company stock prices have increased,…

Read More

How Disability Insurance Works (When You Can't)

One topic that often is overlooked when it comes to personal finances is risk exposure.  Risk is why all sorts of insurance products exist.  Sure, we know we need car insurance in case we are in an accident and medical insurance in case we have an accident or severe illness. …

Read More

Saving into a Roth IRA

As we have said in previous blogs, it is important for individuals to attempt to save money into three distinct “buckets” during their working years.  These buckets are the pre-tax bucket, the after-tax bucket and the Roth bucket.  This blog will focus on saving into the Roth bucket.  Roth savings…

Read More