Stock Market Highs Spur Concerns of Investor Awareness, Ryan Litfin Comments on Perceived Safety in Stock Investments

PHILADELPHIA, PA, June 12, 2013 (Press-News.org) Ryan Litfin is one financial professional who understands that while a market may reflect positive trends, it does not always mean that investors driving the patterns are in a safe position. Currently, recent record closing highs have demonstrated a greater attention on utility stocks over other asset classes--a trend that Litfin finds troubling.

A recent article from The Wall Street Journal details this trend, "The Dow and S&P 500 closed at new record highs [May 14], leaving both major market indexes up 15 percent year-to-date, outperforming most other asset classes. Investors clearly are favoring stocks over other asset classes." In addition, the article reveals, "Commodity prices are little changed (oil) or lower (gold). And 10-year Treasury yields, at 1.95 percent, are near where they started the year, though up sharply from the year's 1.63 percent lows."

In response to these statistics, Ryan Litfin encourages investors to make a more thorough analysis of their assets, weighing trends against what they perceive the market to be. In the article, Seth Masters, chief investment officer of Bernstein Global Wealth Management, describes how perception can be much different than what is truly occurring on in the market. Masters states, "What [investors ] have been doing in the last few quarters is moving into parts of the stock market that are perceived to be safe, more defensive stocks like utilities, and in the process they have pushed prices up to unprecedented levels."

The Wall Street Journal explains that as a result, utility, consumer staple and telecom stocks are trading approximately 50 percent higher, making them much more volatile as they pose greater risk. With such a significant increase occurring, many investors are questioning which stocks are the safest. The article reveals, "Masters says it's those stocks that are not perceived as safe--more cyclical sectors or value stocks trading at a discount to the normal. The fundamentals of those 'cheap' stocks are actually better now." However, Ryan Litfin explains that ignorance may not be creating the heightened risk, but rather false investor interpretations within the market.

"Perception can be a very dangerous thing. I do not believe it is what investors do not know that will get them in trouble; it is what they think they know but is wrong that will hurt them in the long run. Unfortunately most investors, I believe, mainly look to stocks or bonds as investment vehicles. Many also look to mutual funds for diversification. However, I think that while they may feel they are diversified with mutual funds, the fact is, as I see it, the levels of correlation that exist in today's mutual fund space are unprecedented, meaning they all move together or in the same direction. In my opinion, this can be very dangerous for an investor's portfolio," Ryan Litfin concludes.

ABOUT:

Ryan Litfin is a respected finance industry professional who currently serves clients as a private equity advisor and asset manager. With previous experience in financial services and international commerce, Litfin remains dedicated to helping individuals understand ways to simplify investing methods and enhance fiscal literacy. Since 2010, Ryan Litfin has worked to inform the public on current economic matters as a co-host of a popular talk radio program.