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Will The ‘Great Rotation’ Actually Ever Going To Happen?

With the markets performance lately, numerous 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 massive 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 the fact 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 to mention the actual unemployment number with those individuals who no longer appear in the statistics.

One more reason there have been 5 years of gains for fixed income investments and these have been strong gains. Investors are happy that they are 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 on its way 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 perhaps the additions are slowing somewhat. We just usually do not see a massive shift occurring. Remember, when there is a lot of hype it usually is a good idea to act with extreme caution.

Matt Golab

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