Who needs fixed income or other asset classes when stocks are producing great returns? Who cares about what happened during that one month when equities fell 35% - that is ancient history. With such a sharp bounce back it seems the only game in town is to buy stocks, right? In the short term, this is what most tend to think about. But for a long term investor the best way is to balance your portfolio in a way that reduces market risk.
Were you fully invested in during the 'crash' in February/March? If so, that move lower probably did not feel good. Further, if you had little cash available you probably missed out on some buying opportunities. Maybe your portfolio has seen a bit of recovery - stocks are up sharply from the lows. But they needed some help and the Federal Reserve brought it with some unprecedented stimulus. But if another disaster strikes like this coronavirus, will there be such an effort to stem the tide? It's hard to imagine.
Yet, if you had a balanced portfolio of equities, bonds, cash, gold, and real estate holdings then you probably avoided the stress of a wild-swinging market. Bonds have been a safe haven with the Fed bringing rates down to zero. Their intent is to hold rates down for a long period of time, so if you had fixed income even during the worst moments then you made out well.
Long term bonds are up more than 25% in 2020. Gold and silver have also performed well, the yellow metal up a strong 16% or so this year. Real estate assets are also quite strong with mortgage backed securities showing some nice gains.
The SPX 500 is down about 7.2% in 2020, but a balanced portfolio of these assets is outperforming the indices by a mile. Further, the diversification allows one to sleep better at night and not face the nightmare scenario that seemed quite likely when the economy was shut down. Consider spreading your risk in the following manner: 45% equities, 25% fixed income, 10% gold, 5% real estate and 15% cash.