The 35-year decline in interest rates has been a generational game changer. As rates have declined, people have been able to refinance their homes while corporations have been able to refinance their debt. This has helped to smooth out some of the bumps in the economy. However, with the Federal Reserve essentially unable to lower rates much further, economic cycles could be more pronounced going forward. For stock investors this means the markets could be more cyclical going forward. That is to say that market trends will be shorter in duration and potentially more volatile. For bond investors, that means that the 30-year bull market may be coming to an end. Thus, investors may want to complement their stock and bond holdings in their investment portfolios.

A primary argument in Harry Markowitz’s Modern Portfolio Theory is that an investor should not simply invest in an asset class based on its own merits, but also on how that asset is expected to perform relative to other