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2009 turned out to be a year in which most asset classes yielded positive returns after a rough beginning. Just about the only asset class that performed negatively were treasury securities (the only asset class that yielded positive returns a year earlier).
Just as in 2008, correlations were generally relatively high but because the move was in the opposite direction there wasn’t much to complain about (unlike in 2008 when pundits were suggesting that diversification was dead). Commodities recorded the largest gains, followed closely by equities and real estate and finally hedge funds that rose steadily throughout the year. A recent measure of home price to rent suggests that problematic markets such as that of the U.S. are now close to their historical fair market value (could that really be?). The same measure also indicates that certain European countries such as Spain, U.K. and France and bubbly places like Hong Kong are substantially overvalued which means that we can expect the slide to continue in those markets.
Just as in 2008, correlations were generally relatively high but because the move was in the opposite direction there wasn’t much to complain about (unlike in 2008 when pundits were suggesting that diversification was dead). Commodities recorded the largest gains, followed closely by equities and real estate and finally hedge funds that rose steadily throughout the year. A recent measure of home price to rent suggests that problematic markets such as that of the U.S. are now close to their historical fair market value (could that really be?). The same measure also indicates that certain European countries such as Spain, U.K. and France and bubbly places like Hong Kong are substantially overvalued which means that we can expect the slide to continue in those markets.
