In my estimation, the media are indeed exaggerating the bull market. Granted, the S&P 500 via SPY has been defying the odds for so long, few seem to remember what a 10% correction or a 20% bear or 40% disaster looks and feels like anymore. Equally important, the mid-single digit returns for DIA combined with zero percent returns for IWM and VT portray a very different picture than media cheerleaders portray.
And then there’s the kicker. The FTSE Custom Multi-Asset Stock Hedge Index (FTSE Custom “MASH”) is up 7.2% through 12/16. This is the index that my company, Pacific Park Financial, Inc., created for investors to consider investing in a combination of currencies, commodities, foreign debt and U.S. debt. The purpose? Provide a wide range of asset classes (excluding equities) that, historically, have little to no correlation with equities; thus, one is able to hedge against stock risk without relying on a single asset, leverage, shorting or inverse products.
The FTSE Custom MASH Index may have a direct ETF/ETN rollout in 2015. In the meantime, investors concerned about a moderate or severe downturn in the equity markets can consider using a separately managed account for a portion of their overall portfolio. One can contact my colleagues at Pacific Park Financial, Inc. Others may be more inclined to invest in some of the asset class components directly. You would want to look at iShares 10-20 Year Treasury (TLH) as well as iShares National AMT-Free Bond (MUB). You would also want to consider the beneficiary of an unwinding of the yen carry trade, Currency Shares Yen Trust (FXY).
One word of caution. FTSE Custom MASH has access to Japanese government bonds and German bunds on foreign exchanges. Due to liquidity restraints, I do not recommend the use of U.S. ETNs like Powershares DB German Bund Futures (BUNL) or PowerShares DB Japanese Government Bond Futures (JGBL).