Some opinions based on technicals and macro outlook.
An escalation in Ukraine at worst will provide significant buying opportunities if the markets correct but it wouldn't be wise to chase a falling market if it happens or try to guess a bottom.
For people well diversified globally in both equities and bonds, this doesn't matter but for those that have made sector bets intentionally or otherwise, there are signs of some rotation of asset classes. This is also important to note for so called long term buy and hold investors who got an itch to discard lagging funds and pile on to recent over-performing ones often unconsciously.
For example in domestic large caps, value oriented funds and well-diversified funds have lagged this year relative to funds that overweighted technology and healthcare. While the overall trend is bullish for all sectors, there are signs that this is about to change going forward with some mean reversion.
I do not expect technology and healthcare to over perform in the Spring but the leadership taken by consumer and financials (retail, banking, real estate) along with materials. So, funds that overweight these will likely do better. Keep this in mind if you are making fund selection decisions so you don't get into funds based on recent performance just as they revert to mean.
Emerging markets are still iffy because of China issues but developed internationals have been gaining steam. They may or may not over perform domestic equities but they will likely not underperform either unlike last year or so.
Bonds have also stabilized with reduced threats of increasing rates for the short term. High yields are still very strong as credit risk has not been much of an issue. A decent allocation to bonds is a good idea perhaps weighted towards short term and low credit quality with the departure from being well balanced depending on how active one wants to be.
The best approach if one isn't an active investor is still to be fully diversified globally in equities and bonds and so it would be a good time to XRay the current portfolio to make sure they are not currently overweighted in technology and healthcare and domestics. Many funds are heavily correlated now with similar overweighting to recently over performing sectors like technology and health care.
In summary, bullish with some significant mean reversion. A correction if it happens with Ukraine situation should be a good thing.
Just some opinions for what it is worth
Comments
Best regards,
MS
---U.S. equity: growth funds happiest, regardless of cap size, value not
---International equity: Europe generally happy, with the most happy being small/mid caps, Asia and Latin American are the least happy.
---Bonds, many sectors fairly happy; with the longest durations being the most happy.
Some "experts" note that the HY bond area is overpriced. Well, crap; there are other areas that may be overpriced, too. Gonna have wait to fine how all of that works out, eh?
No predictions until I get my own blog up and running.
Take care,
Catch
The China question is - What don't we know about their finances and how could that affect the USA and Europe?
The FED (Yeallen) saying they could put the QE decline on hold if the economics are bad helped the market this week. Will that be forgotten in the coming months?
This is not to imply that one should go all in into these. Just for playing around the edges of a well diversified core.
I would not put any new money in until the Ukraine uncertainty is removed or it precipitates a broad correction.