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'For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth.' Nouriel Roubini
Bill Gross says, "Perhaps the most lucrative pockets of value are in high-quality corporate bonds and preferred stocks of banks and financial institutions that have partnered with the government in programs such as the Troubled Assets Relief Program (TARP). While their profitability may be restricted, their ability to pay interest and preferred dividends should be unhampered. Above all, stick to high-quality companies and asset classes. The road to recovery will be treacherous."
Jim Rogers: Virtually the only asset class I know where the fundamentals are not impaired - in fact, where they are actually improving - is commodities. You're going to see gigantic shortages developing over the next few years. The inventories of food worldwide are already at the lowest levels they've been in 50 years. This may turn into the Great Depression II. But if and when we come out of this, commodities are going to lead the way, just as they did in the 1970s when everything was a disaster and commodities went through the roof.
I have covered most of my short positions in U.S. stocks, and I'm now selling long-term U.S. government bonds short. That's the last bubble I can find in the U.S. I cannot imagine why anybody would give money to the U.S. government for 30 years for less than a 4% yield. I certainly wouldn't. There are going to be gigantic amounts of bonds coming to the market, and inflation will be coming back.
In my view, U.S. stocks are still not attractive. Historically, you buy stocks when they're yielding 6% and selling at eight times earnings. You sell them when they're at 22 times earnings and yielding 2%.
The "smart money" is parking in government-insured T-Bills with zero percent interest - better safe than sorry.
Why even bother? Just hold the dollars outright then. Eventually that money will exit Treasuries and leave US dollars, and the US currency will fall in value.
Why even bother? Just hold the dollars outright then. Eventually that money will exit Treasuries and leave US dollars, and the US currency will fall in value.
The only problem I see with that prediction is that commodies by this time in the 70's recession had already gone thru the roof. We were never in a deflation cycle like we are now.
Gold might be where Oil was at 150. Gold is near parity with platinum, which is historically unreasonable. I'd just stay with cash. Sooner or later, the dollar is in for a big crash, when the deflationary trend rolls over to the unsecured printing of money. If you see the euro gain 5% on the dollar in a short time, start reviewing your options. Watch oil---Canadian is a petro-dollar, and easy to switch to. Forget about making money. In times like this, the smart money sets a break-even goal. Definitely, forget about trying to win back all that you've lost by tomorrow morning. There are no quick bucks to be made without unacceptable rislk. Ride it out and try to keep your chart flat.
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