There is no obvious move to make in this market in my opinion. For each asset there are decent arguments for being long and being short.
Lets start with the stock market. The short case is that is stocks have been in a bull market for about 7 years and it needs a break. On the flip side trader stock market sentiment is bearish wish usually means it will keep climbing a wall of worry. Today the stock markets are down and it looks like the S&P is rolling over while trading below it’s 50 day moving avg. Be cautious.
Lets move to the bond market. Bonds are rallying big time today and have been experiencing high volatility since last year. The bearish case for bonds is that that U.S treasuries have been in a bull market for the last 30 years. What goes up for 30 years must be getting close to the end. Right? Plus rates are expected to rise and everyone is now more afraid of deflation than inflation. Usually the opposite happens of what most people expect. If that weren’t enough our debt to GDP ratio is still awful, like WWII awful:
However, as baby boomers retire more of their money will find it’s way to the bond market pushing up demand. And who knows maybe deficits will actually start to shrink? Why are you laughing? 🙂 During a crisis people jump to bonds which makes them difficult to short.
Gold and silver are dropping a lot today much like everything else. The precious metals have been dropping since 2011. I feel the most comfortable buying silver in this market. The gold / silver ratio still favors silver and prices have been dropping for the last four years. I would say the downside is minimal at this point however we may see one last drop in prices be for things reverse. A good entry point to accumulate if you do not have any exposure. I have been using silversaver to buy silver and gold. A great option if you are to lazy like me to make it to the coin store.
Oil is getting crushed again. Fears that Iran will start to export and the China slowdown are smacking oil lower. Check out the forum thread here for some great charts and discussion: http://taoeconomics.com/ss/viewtopic.php?f=1&t=13989
Chevron is paying 4.5% yield! If you have a long term investing horizon I would take the opportunity to buy and re-invest the dividends.
Real Estate: Again, there are some both good pros and cons. On one side inventory is down and rates are low. On the other the economy isn’t growing as before and rates are expected to rise. Real estate prices and value are going to depend on your area so it will be important to pay close attention.
So, what to do with all of these shit sandwiches? Diversify your shit! Seriously, make sure you are exposed to all of the above so that if one goes down it may be offset by the other assets that rise. For stocks, pay close attention to your stops. Hold more cash then usual. If you want to take high risks make sure you have that money set aside and you understand the risks that you are taking and have exit strategy.
Until next time!