Question

Write a paragraph about this statement. “Asset markets have performed better than the overall economy”

Answer 1

There are times when the markets go down and it is very difficult to get a control over it and hard to hide in equities. In this situation most of the sectors show a downward trend and go in sinking mode. But from the investors viewpoint there are other assets which help them from the sinking trend and hold steady income even when the markets suffer. It has been seen that in the last few years government bonds have performed very well and it has constantly helped in balancing the down market and outperformed equities. This happens also because they are considered a risk-off asset. Other Assets like gold, cash also have performed well. Gold is a physical asset where one's money can be protected. Generally people hold this yellow metal with them till the end even when the markets are falling, and this process helps in stabilsing or increasing the prices of gold. Even cash is very much considered as a personal asset. People hold cash with them, which is not recorded and in the times when markets show a downturn, cash comes to the rescue of people. It is generally the value of what they hold in physical cash.

Therefore, it is said that Asset markets have performed better than the overall economy, because these assets come to the rescue of people in times of general market fall. Thus, it is always better to have diversified portfolio so that it helps in times of hardship and market down trend.