US economy

Rejoice Over the Markets’ Marvelous Rallies. Then Worry.

By some measures, 2019 was the best year for the global stock market in a decade — and the best for the American bond market since 2004.

Then, with the signing of an initial trade deal between the United States and China in mid-January, the rallies took on new energy.

When markets rise relentlessly like this, investing looks easy. But it isn’t, really.

To the contrary, markets often fall — and sometimes crash. Protecting your hard-won money can be much harder than amassing it.

The question, as always after magnificent gains, is: How much longer will this spectacular rally go on, and what can I do to protect my profits? If you weren’t lucky enough to participate in the recent rallies, you will also want to know whether this is still a good time to jump in.

We can’t answer these questions with absolute certainty. In fact, as John Schwartz writes in a satirical essay, it seems lately that the law of gravity has been repealed and bad news has become a recipe for handsome returns.

Even if you don’t buy his whimsical theories, you will find plenty of solid analysis and helpful suggestions on how to cope with uncertain markets in our quarterly report on investing.

In an analysis of fixed-income markets, Carla Fried says the big party in the bond market is probably already over. Don’t buy bonds with the expectation of replicating 2019’s stellar gains, she says, but do buy them for their ability to provide steady income and a hedge against a possible fall in the stock market.

Few funds managed to produce better gains in the fourth quarter than the three profiled by Tim Gray. They made successful bets on small companies in Japan and a retailer in Canada, as well as investments in at-home fitness in the United States and the millennial generation’s love of pets.

For a concise summary of the markets’ torrid performance in the last year — and of the factors weighing on stocks, bonds and the global economy now — you might turn to Conrad de Aenlle’s overview. He says investors have become increasingly optimistic, though underlying conditions have not improved all that much, which is why it may make sense to temper your enthusiasm.

For other perspectives, there’s a lot more in our report.


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