The monthly numbers for all the asset classes suffered red ink in September (save for cash), as our table from yesterday details. Fortunately, that’s a rare episode.
For the 10 asset classes listed in that table, the last time the representative indices all posted monthly losses was October 2005. Overall, there have been three times in the last 10 years when losses infected all the major asset classes in one month: 9/08, 10/05, and 4/04. That translates to 2.5% failure rate, if we can call it that. It’s low, but it’s higher than zero, and so we can’t be blind to the possibility.
What’s different this time is that the crisis that came to a head in September 2008 makes the problems of the recent past look shallow by comparison. Indeed, the current troubles are deeper and threaten the economy. The main lesson today is that no asset class is immune from financial and economic crises. Nor is there any reason to think that all the major asset classes can’t suffer losses simultaneously.
The good news is that an across-the-board fall in the 10 major asset classes is abnormal. But it does happen, and a bit more often such events nearly happen.