Many have been asking my opinion about the economy, the equity markets, the bond market and more, so here it is in brief. I would continue to hold cash, gold, fundamentally strong global equities, commodities broadly speaking over the long run, and not much else right now. Further it is likely that the US dollar will continue on it's long term descent, so beware that if all you own are dollar denominated assets your purchasing power will be eroded away.
Why concern on US equities? I believe the fundamentals remain very poor. Yes corporate earnings and balance sheets are strong but because of cost cutting primarily, which is largely done. Without a robust domestic consumer how much hope can their be? Further the economic numbers have been horrible - employment, GDP, and more. I am particularly worried about the financials given that spreads (difference in yield between government bonds and corporate/mortgage/high yield debt ) in general are narrow, issuance is down, and the poor real estate market will work it's way in to write-offs.
US bonds. Rates are so low, artificially low due to the huge treasury buying program which cannot go on forever. You are simply not getting paid enough to go long duration. For more on this read the latest commentary by bond manager/guru Bill Gross of PIMCO.
Gold - protection against a depreciating dollar, financial insecurity, and the declining faith in the US dollar as the currency of choice. For so much more on gold check out this website - JSmineset.
Sorry wish I could be more positive on both the economic and market outlook but I really see little good news out there. Bottom line we have spent beyond on our means for some time now, at multiple levels, and sooner or later you have to pay the price.
I am officially taking a blogging vacation so wishing you all a fabulous August.