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Broad Market Gains Power Historic Rally

The market’s returns this year have indeed been fascinating. It has been over 20 years since all assets have gone up at the same time, as has happened so far this year. What does this say about whether all assets are over-valued, as some have recently suggested. My sense is that the answer is unknowable, and thus a diversified mix of assets is the best course going forward (as always).

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From stocks to bonds to commodities, world financial markets have rallied in unison during the first half of 2014, a feat not seen in more than 20 years and a reflection of investors’ optimism that central-bank policies will boost growth.

 

Six closely tracked gauges of world stock, bond and commodity performance are headed for gains in the first six months of the year, the first time they have done so since 1993. The Dow Jones Industrial Average is up 1.7% for the year, putting it on pace for its fourth-straight first-half rise.

 

Through Friday, gold was up 9.7%, the Dow JonesĀ UBS Commodity Index 8.1%, the 10-year U.S. Treasury note 6.4%, the MSCI World Index of developed-world shares 4.8% and the MSCI Emerging Markets Index 4.3%.

 

The rallies reflect market resilience amid uneven U.S. growth and political and economic unrest in the Middle East, Ukraine and elsewhere. Simultaneous rises in the six categories are unusual, because stocks and most commodities tend to rise in good times, while bonds and gold often benefit from economic weakness and market distress. The last time all six rose together through June 30 was 1993.

 

Full Wall Street Journal Article here.