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"One of the Best Investments" of 2018… and 2019?

The year’s scary environment for risk assets proved this to be the only place to hide

by Bob Stokes
Updated: December 27, 2018

At the start of 2018, how many articles did you see that quoted a financial professional who strongly recommended T-bills? Or outright cash dollars? Or at least being out of the stock market?

Right -- somewhere around zero. Most prognosticators recommended stocks. This Jan. 8, 2018 Marketwatch headline sums it up:

Bullish sentiment for U.S. stocks is at a seven-year high

By contrast, our March 2018 Elliott Wave Theorist looked at the big picture for risk assets, which appeared quite precarious, and said:

There will be nowhere to hide except cash.

Five months later, the August Elliott Wave Financial Forecast reiterated:

One of the best investments, in our opinion, is also the safest: cash.

Yet, the prevailing sentiment was the opposite at the time, as this chart and commentary from our December Elliott Wave Financial Forecast show:

LongLiveCash

This chart showing the percentage of Rydex assets held in money market funds relative to bullish equity funds captures the historic contrariness of our August assessment. On September 5, the percentage fell to 0.11%... The only other comparable reading was also 0.11%, on July 14, 2000, after which a bear market cut the value of the S&P 500 index in half by late 2002.

Now, after stocks broke a few December records and the S&P 500 officially fell into bear-market territory, we have this 2018 investment summation from CNBC (Dec. 21):

Nothing worked for investors this year -- nearly every major asset class is in the red for 2018.

Cash in the form of money market funds is the only asset that... had a decent positive return in 2018.

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