At any given time some asset classes will do better than others. Performance may ebb and flow with the business cycle, or specific asset classes may outperform others due to regulations or innovations in their realm or any combination of variables.
For instance, according to Casserly, one broad trend investors should be aware of is that tangible and intangible assets work in opposing cycles.
"From 1982 to 2000, intangibles, like stocks, did great. Now tangibles are doing well, so clients should look at things that are more like alternative investments, for instance nontraded real estate investment trusts or other alternatives depending on risk tolerance," she says.
Including alternative investments such as commodities, precious metals, REITs or even currencies can be a great way to diversify your portfolio with investments that offer returns uncorrelated to the stock market.
No one can accurately predict when commodities or precious metals will do well or when the stock market will go down, so investing in many different asset classes eases uncertainty and cushions losses from stock market downturns.
Plus, by owning a little bit of everything, investors are spared the expense and futility of chasing after the hot asset classes after they've already become expensive.
-- Sheyna Steiner