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

With the markets performance recently, numerous so called experts are calling out a “great rotation” from bonds into stocks. The only issue 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 huge 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 dont appear in the statistics.

Another reason there has been 5 years of gains for fixed income investments which have been strong gains. Investors are pleased that they are not taking a loss and are making great returns with little risk at the moment.

Money is going 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 dont see a massive shift occurring. Remember, when there is a lot of hype it is almost always best if you 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, California. when will the Great rotation happen
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