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Its hard to keep this market down. The Dow is now up better than 5% this year despite rising oil prices, tensions in the Middle East and Mid West.
It is hard to imagine continued gains with US gas at $4 gallon and interest rates on mortgages running higher but the market has baffled experts before. Portugal, Ireland and Greece were last year’s “bear” market ignition but those worries passed. The market is due for some downside but we would not be selling here except for the most nimble traders.
It seems to us that the “most nimble” traders frequently end up skewered and at Fagan Associates we prefer moves of moderation and balance- diversification.
Finding a bull in bonds is impossible. The “bubble” in bonds has been forecast and averted frequently over the past two years. Keep maturities short, buy some high yield bonds and inflation protected funds/etfs. It is a time to be cautious in the bond market as risk greatly outweighs reward. Caution however doesn’t mean you should completeley ignore this asset class.