About

Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin is a PhD and received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

Tuesday 20 June 2023

The Ghost of Irving Fisher Returns?

So many market cliches have been used to describe markets over the years. These include Goldlilocks, the Fed Put, irrational exuberance, don't fight the FED, don't fight the tape, etc. The aptest phrase for today's markets is the famous quote from economist Irving Fisher in October 1929 right before the Great Depression of the 1930s set in:

"Stocks have reached what looks like a permanently high plateau"

Source: Market Cycles Chart - New Trader U

Of course, central banks have a plethora of unconventional monetary policy tools at their disposal to avert major crises these days, but valuations are quite stretched.

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My Asset Allocation Strategy (Indian Market)

Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.