New highs in the stock markets are great for those who already own stocks. But there is a downside when stocks seemingly do nothing but rise. Any investor who’s been holding cash, waiting for lower prices and a better entry point, has had to keep waiting. And those deploying new savings into the markets have had to do so at higher and higher prices.
Those rising prices are also a catch-22 for long-term investors, because pricey markets today make impressive future gains less likely. The S&P 500 currently trades at about 30 times its average inflation-adjusted earnings over the past 10 years (the so-called CAPE ratio). Historically, levels anywhere near that high have almost always preceded periods of disappointing returns.
That’s why many investors are more comfortable buying shares when there’s blood in the streets. And the good news for those investors is that there will always be a bear market somewhere, even when the broad market is killing it. Three asset classes that have been left behind during this bull run stand out in particular right now in the eyes of bargain hunters:
石油价格在2008年6月达到每桶150美元的巅峰。从那以后，水力压裂法的革命带来了新的产出，再加上低通货膨胀，石油价格从那以后已经下跌了三分之二，能源公司的利润也受到沉痛打击。2008年中期至今，能源股一直是标普500指数中表现最差的类型，甚至和倒数第二都相距甚远：基金The Energy Select Sector SPDR ETF（XLE）的跌幅超过13%，而同期标普500指数整体却有超过200%的涨幅。仅有的安慰奖是高股息：例如，基金The Energy Select Sector SPDR ETF目前的股息为3.8%，是整体市场平均水平的两倍有余。
这些商品生产者的股票往往表现出很大的波动性，因为它们对经济增长和商品本身不确定的供需情况高度敏感。共同基金Vanguard Global Capital Cycles（VGPMX）很好地体现了金属市场和相关商品市场的情况，它在这段时间里连跟上市场的脚步都做不到：过去十年里，该基金跌幅近50%。（相对平庸的全球经济增长又一次成为元凶。）投资者青睐贵金属和矿业股，往往因为它们与整体市场走势关联不大，可以让投资组合变得更加多样化。不过，持有不相关的资产经常也意味着投资者会在市场其他股票突飞猛进时吞下重大损失。
然而，投资者认为拐点将近。投资巨头AQR Capital Management的掌门人克利夫·阿斯尼斯在最近一篇文章中通过一系列指标指出，增长股的价格达到了互联网泡沫以来的新高。他写道，与之相反：“除去技术泡沫，价值股的价值则是这一时段的最低水平。”
本文作者本·卡尔森（Ben Carlson）是里萨兹财富管理公司（Ritholtz Wealth Management）机构资产管理部门的主任。他的公司在价值型股票基金中持有份额，但不是本文中提到的任何具体基金。
Oil prices topped $150 a barrel in June 2008. Since then, new production unleashed by the fracking revolution, combined with low inflation, has helped drive oil prices down by two-thirds—while hammering energy-company profits. Energy has been by far the worst-performing sector of the S&P 500 since mid-2008, and it’s not even close: The Energy Select Sector SPDR ETF (XLE) has fallen more than 13%, versus a gain of more than 200% for the S&P 500. One consolation prize is high dividends: XLE, for example, currently yields 3.8%, more than twice what the broader market yields.
Precious metals and mining stocks
These commodity-producer stocks often exhibit wild volatility because they’re unusually sensitive to economic growth and fluctuating supply and demand for the commodities themselves. Vanguard Global Capital Cycles (VGPMX), a mutual fund that’s a good proxy for the metals markets and related commodities, has done worse than just trail the market during this cycle: Over the past 10 years, the fund is down nearly 50%. (Again, relatively modest global growth is a culprit.) Investors often seek metals and mining stocks because they have a low correlation to the broader market, offering the benefits of a diversified portfolio. But sometimes owning uncorrelated assets means eating big losses while the rest of the market screams higher.
After the dotcom bubble deflated, value stocks—stocks that are cheap relative to the value of their underlying businesses—went on a run of huge outperformance over growth stocks. But growth has beaten the pants off value since the financial crisis (see graphic), led by high-growth companies such as Amazon, Netflix, Google, and Facebook that have monopolized investor mindshare. The growing economic impact of tech innovation, particularly in software; the rising value of intangible assets like patents, copyrights, and trademarks; and the willingness of investors to pay extra for growth in a world awash in capital have all contributed to growth’s edge.
Still, investors think a turning point could be near. Using a number of metrics, Cliff ¬Asness, head of investment giant AQR Capital Management, showed in a recent piece that growth stocks are more expensive now than at any time other than the dotcom bubble. In contrast, Asness writes, “Excluding the tech bubble, the value of value is the cheapest it’s ever been.”
Of course, just because something is cheap doesn’t mean it can’t get cheaper. As our examples show, each of these categories has a black eye for a reason. That’s what makes the current situation for investors so confusing: It can seem like your only choices are to invest in assets with good fundamentals but high prices or to invest in assets with deteriorating fundamentals but low prices. Yes, history tells us that economic cycles will eventually boost energy and metals stocks and value stocks again, but it won’t tell us when.
The best move may be to worry less about “when.” Many investors (including my firm) favor a long-term strategy that involves broad diversification. In practice, that often means investing some capital in the areas of the market that have been hit the hardest, to take advantage of the cheap entry point. When deciding whether to wade into beaten-down asset classes, here are some lessons to keep in mind:
Nothing works all the time
Value investing has been repeatedly vetted by academics, professional investors, and the iconic Warren Buffett as an approach that works over the long term. But even sound investment strategies are bound to go through painful periods of underperformance. After all, the only reason any assets earn a premium over the rate of inflation is because owning them involves risks—and “sound” doesn’t mean “risk-free.”
Diversification means always having to say you’re sorry
The main reason to diversify is to avoid concentrating your money in a terrible-performing asset for an extended period. But spreading your bets also means that at least part of your portfolio will be sucking wind while the rest of it sprints ahead. You’re accepting the occasional strikeout to increase your odds of winning the game.
Don’t forget to rebalance
Diversification works only if you periodically rebalance your asset allocations. In essence, this means selling a little bit of what has done well to buy a little bit of what hasn’t. All of the asset classes above experienced strong returns before their fall from grace. Did you sell off a bit during the good times to bring them back to their target weights? If not, their losses have been even more painful for you—which could make it even harder to buy now, when strategy might dictate that you should.
Ben Carlson is director of institutional asset management at Ritholtz Wealth Management. His firm has positions in value stock funds, but not in any specific fund mentioned here.
A version of this article appears in the January 2020 issue of Fortune with the headline “Buying ‘Bears’ in a Bull Market.”