MICHEL PIREU: Diversification helps allay fear as uncertainty rules the market
Overcoming trepidation about investing is necessary as uneasy times are not unusual
Warren Buffett is often quoted as saying, "Be fearful when others are greedy", warning us to be careful of high-flying assets coming crashing down. This raises the question of whether the "others" are being greedy now. With the Dow Jones breaking through 22,000 and the disconnect between our market and economy, it seems a good time to ask. The problem with the mass of information available to us is that it’s easier than ever to latch on to a narrative that fits our world view. In the financial markets, this makes it harder than ever to gauge investor sentiment. Rather than being greedy, it might be that investors continue to put money into equities because there’s simply nowhere else for it to go. As Oaktree Capital’s Howard Marks puts it: "People may be thinking in not a bullish way, but acting in a bullish way. What would make them do that? Rates near zero. And when you live in a low return world, you have to take risk to get return. People are willing to take risk because they’re...
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