June 20, 2016 | Updated on July 15, 2019
Cutting back on stocks and moving more money into cash can bring peace of mind—and also pain, if it means missing out on the marathon bull market in U.S. equities. The opportunity cost of sitting out equities in the second quarter, when the S&P 500 rose 3.8% to a new record, was significant but far from as crazy-making as missing the first quarter’s 13% jump. Still, the continued rally lends urgency to the conundrum among investors about whether to do nothing, cut exposure to equities or run for shelter.
The appeal of safe havens such as cash or fixed-income is undoubtedly strong, though the expected returns aren’t. Uncertainty tied to trade conflicts, worries about weakening economic growth and increasing tension between the U.S. and Iran are just some of the reasons to be jittery. While inflation pressure remains subdued, talk of a coming recession is getting louder.
To get a read on what opportunities may exist today, we asked our panel of investment experts for their best ideas on where to stash a $10,000 windfall now. Two names are new to the group: Brian Singer, portfolio co-manager of the William Blair Macro Allocation Fund, and Terri Spath, chief investment officer at Sierra Mutual Funds. Suggestions range from funds focused on infrastructure and emerging market debt to gold and global telcos. Bloomberg Intelligence exchange-traded fund analyst Eric Balchunas adds his suggestions for how to use ETFs to play on the ideas presented by the panel, and looks at how last quarter’s ETF suggestions performed.
Before making any moves to a portfolio, however, it’s smart to do a financial tune-up. Take a look at “The Seven Habits of Highly Effective Investors” to see if you’ve set yourself up for financial and investment success.