David Rosenberg: Bear market rallies are fun to rent, but not to own — so have some insurance

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Own stocks for their higher return potential, and bonds to preserve the capital when the tide turns, writes David Rosenberg. Read more.

So many people are beating themselves up for nothing . God forbid you miss a bear-market rally these days. What is wrong with these people? Are they or their clients really that short-sighted? Is it lost on these folks what happened in 2022? Is it lost on these people that even with a modest broadening out of late, the vast majority of S&P 500 sectors are still well off their peaks?

What happened in 2022 has happened before, and thankfully doesn’t happen very often, and was the product of a rare combination of sky-high multiples in the S&P 500 coinciding with a complete lack of coupon protection in the bond market heading into the huge, but brief, You get rich by buying stocks, to be sure, if you can ride out the cycles, and I will be the first one to say that the S&P 500 is filled with quality companies, notwithstanding the ultra-high concentration in technology, but unlike the dot-com craze two decades ago, at least today’s bubblelike companies are making a profit. And you buy bonds to limit your risks and provide a buffer when the tough economic times come, and they always come.

 

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David Rosenberg: Bear market rallies are fun to rent, but not to own — so have some insuranceOwn stocks for their higher return potential, and bonds to preserve the capital when the tide turns, writes David Rosenberg. Read more.
Source: financialpost - 🏆 7. / 85 Read more »