Whether Arnott or Siegel turns out to be right, it doesn’t mean we should all head for the hills and give equities the cold shoulder. In fact, right now there are many valuations that investors are finding attractive, and we’re seeing a number of areas go above their 200-day moving averages.
The best way to settle this argument is to have a strategy of your own, instead of consistently banking on one thing to go your way in all circumstances (for example, hanging onto bonds come hell or high water because historically, they’ve been outperforming).
Strategies enable you to weather both the good and the bad times, and not worry about the “historicals.” We watch the trend lines so we can see those areas that are moving and get in for a potential long-term uptrend; we’re out when the trend drops below its 200-day or 8% off the recent high.
Kevin Grewal contributed to this article.