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By April Joyner and Ira Iosebashvili
NEW YORK (Reuters) - With assets of all stripes rallying and the S&P 500 Index <.SPX> approaching fresh records, investors are facing a dilemma: stay in or get out.
Surging U.S. stocks, Treasuries and gold prices have come to the brink of simultaneously notching record highs for the first time in history, while rallies in once beaten-down assets like oil, financial stocks and the euro have accelerated. The S&P 500 is up 50% from its late March lows.
"We are in the 'bull everything' trade," said Christopher Stanton, chief investment officer at Sunrise Capital Partners. "There are very few losers. Only laggards."
The broad-based gains have presented investors with a conundrum. While many are uneasy owning assets that appear richly valued or trade at record highs, holding too much cash or an outsize allocation to underperforming stocks has hampered portfolio performance during the recent rally.
Another concern is the possibility of a broad reversal where assets that appreciated in tandem sell off simultaneously, leaving investors with few places to shelter.
Such market action was seen at various times during the coronavirus-fueled sell-off in March, when gold, stocks and Treasuries tumbled together as frightened investors went to cash.
(GRAPHIC: It takes three to tango - https://fingfx.thomsonreuters.com/gfx/mkt/oakvemrnxvr/Pasted%20image%201596747725286.png)
STAYING THE COURSE
Plenty of investors believe the rallies are likely to continue as long as interest rates remain low and the Federal Reserve keeps pumping out stimulus - factors that have benefited everything from technology-related stocks to commodities such as oil and gold.
And while some investors worry that the S&P 500 <.SPX> has become increasingly skewed towards technology <.SPLRCT> and communication services <.SPLRCL> - which make up about 39% of the benchmark index's market capitalization - these sectors also accounted for about 39% of the index's second-quarter earnings, according to IBES data from Refinitiv.
"We still like businesses that are tech-focused and creating efficiencies in a post-COVID world," said Conor Delaney, chief executive of financial advisory network Good Life Companies.
Among his holdings are shares of Zoom Video Communications Inc <ZM.O>, a bet that the shift to work-from-home prompted by the coronavirus is unlikely to reverse anytime soon.
Meanwhile, a 9% decline in the Dollar Index <=USD> from its high this year has given another tailwind to gold <XAU=>, which is denominated in the U.S. currency and becomes cheaper to foreign buyers when the greenback depreciates.