Actually, it never left, even if it seemed otherwise. Perhaps it was hibernating for a few years. No longer. As November’s tally of mixed performance among the major asset classes shows, the prospect of throwing money at virtually anything and earning a tidy return suddenly looks conspicuous by its absence as a prospective opportunity.
The numbers, as always, tell the story. As our chart below documents, selection was everything in last month’s financial horse race. Indeed, TIPS were the best performer, rising more than 4% in November. In last place: REITs, which shed a hefty 9.5%. Looking at the year-to-date returns for two shows an almost mirror image of results: TIPS are up 11.9% in 2007 through November 30; REITs have lost 11.7% YTD.
Red ink, in fact, is a growing presence on our table above. That’s just another way of saying that volatility has returned. Anything’s possible, of course, but it’s starting to look like nuance and variability has returned to the money game. As a result, the details matter once more in building and managing diversified portfolios. The game once again favors the nimble asset allocators, or so we predict.