Sometimes the best investment advice is to do the opposite of what everyone else is doing.
When the stock market was in free fall during the financial crisis, many investors who had hung on for as long as they could take it finally gave up and sold their stocks, locking in huge losses and missing out on a historic rally.
Last summer, with the first hint that the Federal Reserve Board would be tapering its bond purchases, interest rates began to rise and investors sold bonds in record numbers. In many cases, investors moved more money into stocks, as the market continued to set records throughout 2013 after a brief drop that was fueled by taper talk.
That’s proven to be a mistake, as bonds have so far outperformed stocks in 2014. In fact, 10-year Treasuries have outperformed the S&P 500 by about 620 basis points.
We’ve suggested that investors not give up on bonds and likewise suggested that gold may shine again, in spite of its tarnished 2013 performance. Recent trends suggest that it’s worth repeating this advice.