Turmoil in the financial sector jolted the financial markets last month. This article reviews what started it all, what went wrong, the scope of the problem, and ways to keep your cash safe.
Stock markets in the U.S. and around the world rebounded in the first quarter of 2023. After suffering steep losses last year, investors snapped up beaten-down shares. Shares in developed markets ex-U.S. led the way, based on a set of ETF proxies. Vanguard FTSE Developed Markets surged 8.0% in the first three months of the year, closed followed by U.S. shares (VTI), which posted a 7.2% rally. Emerging markets (VWO), by contrast, were far behind with a relatively modest 3.7% gain in Q1.
Stocks and bonds usually compete for investors’ dollars. But for the last decade or so rock-bottom interest rates have caused many would-be bond buyers to increase their allocations to stocks. The acronym TINA – which stands for “There Is No Alternative” – was coined to describe the rationale for this rotation into equities. The dramatic rise in interest rates means that is no longer the case.
Financial markets tested investors’ resolve in 2022 to a degree rarely seen in recent years. Diversification and deft money management decisions helped mitigate the pain, but sharp losses weighed on most markets around the world last year.
Tactical asset allocation strategies that utilize economic data and mathematics in an effort to generate higher returns and lower risk. Here’s how it works.