"This trend is one that hasn't been seen in roughly four decades (some baby boomers may remember these factors when they were younger, but as time goes by, these things become a distant memory). Thus, while we're living in a time of historically high valuations across the board (mirroring the dot-com bubble), housing prices much higher than the 2008 GFC levels that flattened the market for years, and bond yields which are the highest they've been in some time, it's a very odd time."
"In fact, during specific periods immediately following the GFC, the inflation rate in the U.S. was actually negative. In such a period of time, staying investing and sitting tight in equities and other assets made sense. For those who were able to do so, holding onto one's house and investing in stocks at rock-bottom levels turned out to be the right thing to do."
Structurally high inflation has returned after roughly four decades, creating a materially different investing environment. Valuations sit near historically high levels, housing prices exceed 2008 GFC peaks, and bond yields are elevated. Rising trade tensions and geopolitical risk add further uncertainty. The prolonged low-inflation era after the GFC allowed buy-and-hold equity strategies and homeownership to generate strong returns for many investors. Those nearing retirement and younger investors now face incentives to emphasize capital preservation rather than aggressive growth, and traditional 60/40 allocations may not perform as they did during the prior low-inflation regime.
Read at 24/7 Wall St.
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