Doing what has worked in the immediate past is what I call the “easy trade,” and from my experience, life and investing is rarely that easy. As it turned out, the S&P continued higher in 2014, gaining 11.4 percent, though most other areas of the stock market underperformed. But the Barclays U.S. 20+ Year Treasury Bond index gained roughly 25 percent for the year. The lesson is, be cautious of the general consensus; by the time everyone is in agreement, the show is nearly over.
Currently, the “easy trade” is for further strength in the U.S. dollar in 2015. This implies that the U.S. is the only place to be invested, and that commodities and foreign investments will continue to underperform in 2015, as they did last year. That would be too easy.
This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.
This article was written by Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH).