- inflation: there is the prospect of hyperinflation due to the unprecedented spending of governments or deflation as the complete collapse of all types of demand.
- economy: some believe that recovery will be after 2009 others say it will take few years to recover out of a depression.
- markets: some say very cheap other say very expensive as earnings will collapse completely.
- emerging markets: is the future as it recovers due to increase consumption by its citizens while other expecting complete collapse of paper economies.
- US dollar: some forecast its collapse others say it will hold up as all currencies are in no better shape.
- gold: some think it worth $6000 while others think it will be worth 500 in few months.
- Treasuries: it is a bubble while money still pours into it. This indication alone is very intriguing to me. The treasury market is worth trillions of dollars so capital owners are institutional and large. These investors, and it seems a lot of them, are saying that 2.3% is the best return they can find for the next few years, then you should listen up.
- and the list goes on.
So what to do?
Well I have few things I am doing right now:
- I am adjusting my time horizon to at least 10-15 years to see recovery in equity prices to the July 2007 peak. So you have to make sure that you do not need the capital for that long.
- Yes equities are becoming cheap but it will be cheaper, see my post here, so I will buy in small increments and not over-commit. I will commit fully when PE ratio becomes in single digits.
- Fixed income offers great value and great returns right now so I will take advantage of it before I overweight equities.