Signs of a Bear Market: Cash Investments Are Beating Stocks, Bonds

Here’s a headline from MarketWatch last week that really caught my eye: “Cash Beats Stocks, Bonds for First Time in 25 Years.” 2015 has been that kind of year. Globally, both stocks and bonds are down, while cash — earning virtually zero interest — has been flat. It has been a case of winning by not losing. In a bear market, cash investments are king. I could split hairs and point out that not all bonds have been losers this year. Treasuries have had a respectable year as yields have fallen. The 10-year Treasury started the year yielding 2.2% and now yields less than 2%, so in addition to the interest income, Treasury holders have seen a modest amount of capital gains.

Cash investments are the only thing that has completely escaped the volatility. So what do we actually do with this information? Take what’s left of our portfolios and invest in bunkers, canned goods and ammo? Or more realistically, should we simply sell everything and sit in cash investments until the bear market runs its course? Not exactly. There are pockets of value out there, and some indicators suggest that this bear market – or at least this leg of it – is probably over or close to over for now. If you’re willing to roll up your sleeves and pick individual stocks, I think you stand to do very well, bear market or not.

Source: InvestorPlace

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