Alternative Reality

Diversification has been called the only free lunch in investing. This idea is based on research showing that diversification, through a combination of assets like stocks and bonds, could reduce volatility without reducing expected return or increase expected return without increasing volatility compared to those individual assets alone.

Inflation Returns to the Conversation

During the month of May, core inflation did something it hadn’t done in six years — it reached 2%. This percentage has become an important barometer for the market because the Federal Reserve (the Fed) has targeted 2% as an optimal level of inflation for the U.S. economy. As inflation meets and has the potential to exceed this important level, investors should take note.