Monthly Archives: October 2008

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Is The ‘Great Rotation’ Ever Going To Take Place?

With the markets performance lately, many so called experts are calling out a “great rotation” from bonds into stocks. A possible problem is, a jaded investor always keeps cautious. We have seen some of the greatest moves in the market the last few years but we have a enormous stockpile of investor money still in money markets. A great article to read over is one by Dhara Ranasinghe titled “Why talk of a Great Rotation May be Overblown” from CNBC talks about what we can expect from this risk move so many are hoping for.

One key point thats been made is that even though the market has done quite well in the U.S. and confidence is increasing there has been very little improvement to the U.S. economy. The unemployment number is way too high, not forgetting the real unemployment number with those who no longer appear in the statistics.

Another reason there have been five years of gains for fixed income investments which have been strong gains. Investors are happy that theyre not taking a loss and are making great returns with minimal risk at the moment.

Money is moving in to equities but a lot is coming from the cash world, money markets. Theres a lot of money that has not been in play the last few years. The numbers show a minimal amount of money is coming from bond funds and possibly the additions are slowing somewhat. We just dont experience a massive shift occurring. Remember, when there is a lot of hype it is usually a good idea to act with extreme caution.

Matt Golab

Matt is an Investment Advisor Representative as well as the Chief Advisor of Aaron Matthews Financial Resources headquartered in Elk Grove, CA. when will the Great rotation happen
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