A holiday-shortened trading week and mixed U.S. and weak German economic reports left U.S. stock markets unchanged and commodity markets lower despite continued U.S-China trade agreement optimism and stronger-than-expected Chinese GDP growth and industrial production numbers released on Tuesday.
While diversification may be one of the most common refrains in finance, the irony is that it is home to widespread misconceptions among investors, both novice and seasoned alike. Everyone intuitively understands the wisdom of “don’t place all your eggs in one basket” – such logic extends to everyday life – but investors often find themselves with far fewer “baskets” than they even realize.
What factors account for this discrepancy in diversification?
Initially falling early in the week on the IMF’s reduced global and U.S. economic growth forecast for 2019, commodity and U.S. stocks markets finished the week higher after strong U.S. bank earnings and Chinese trade and lending reports on Friday.
In a world of exotic assets and fast trading, what has become of the world’s oldest asset, gold? Modern finance, where the pursuit of endless sophistication is often confused with success itself, has forced investors to ask a pivotal question: is gold obsolete?
Positive economic reports from both the U.S. and China combined with increased optimism over a U.S.-China trade agreement pushed U.S stock and commodity markets higher last week.
Continued concerns of U.S. economic growth negatively affected by lower global growth and statements of some Federal Reserve Bank officials indicating it’s too soon to consider lowering rates, limited U.S. stock market gains and helped push commodity markets lower through Wednesday last week.