We came across a number of asset class items that you might find interesting. If you only read one item check out the first link that explores some important portfolio management concepts.
Asset class correlations
The Capital Spectator has an interesting post up that examines the changing correlations between various asset classes. They note rising correlations between bonds and stocks, between large and small caps, and between REITs and stocks. On the flip side they note falling correlations between domestic stocks and international stocks.
Ticker Sense has a neat graph showing Wall Street strategists becoming less bullish as the market has risen.
Barbara Kollmeyer at Marketwatch.com wonders whether caution isn’t warranted in relation to small and mid-cap international stocks.
Greg Greenberg at TheStreet.com notes the surprising strength in REITs and their growing overvaluation.
Steve Johnson at the FT.com reports on the unwinding of the “commodity currency” play as relative yields have narrowed.
Short term bonds
Jonathan Burton at Marketwatch.com notes the advantages of using “ultra-short” term bonds funds as a safe haven.
Shefali Anand in the Wall Street Journal explores the theory that so-called “life-cycle” funds are boosting bond returns. John Spence at Marketwatch.com reports that the Vanguard Group is adding to their lineup of target-date portfolios.