To understand how market cycles affect you as an investor, you need to know that:
Cyclical patterns of gains and losses recur in all asset class markets — the stock market, bond market, money market, and real estate market — and in all the subclasses, or smaller segments of those markets. For example, sometimes bonds produce strong returns and other times bond returns are flat or falling. The same is true with stocks.
The cyclical pattern in one asset class tends to work in opposition to what’s
occurring at the same time in another class — though there are exceptions, when both markets are strong or weak.
For example, in most cases when the bond market is strong, the stock market is flat or falling.
If you own both stocks and bonds, strong performance in one segment of your portfolio can help offset weak performance in another.
Alexandra Lebenthal, President and Chief
Executive Officer of
Alexandra &
James, Inc.
Alexandra Lebenthal, President and Chief
