Investors have started 2013 feeling bold. Equities are firm, bonds are weak and gold is soft. Is this the long-awaited rotation back to risk? Many market participants say so. But betting on a herd movement is a dangerous investment strategy.
January’s apparent flight from safety may herald the start of a new phase. It could equally be a false dawn. Stock-market recoveries have fizzled out many times before. Moreover, making a wholesale switch from one asset class to another flies against the sound investment principle of investment diversification.