I was watching CNBC Monday night when George Gleanos was on the show, the picture that he painted for the first six months next year was very dark. The whole world believe that China and India, to an extent, would provide the growth for next year, but according to him India's economic data was "falling of a cliff" and there were problems starting to show in China, Europe is definitely heading for a recession and the resent upstart in the USA was just temporarily ect ect ect. Is this just noise or must an investor start moving to cash ? Comments please
I see this all as a function of risk and return. If you consider that financial institutions, pension funds and the retail investor have a choice between cash interest rates, bonds and stock yields, then the equation becomes a bit easier to understand. A 2% didivend yield is looking a lot more attractive than a number of other options. Recessions, economic downturns, speculation its all stale news that are ignored by the markets. The event that will really trigger selloffs would be an interest rate increases. There is few things markets hate more than interest rate increases.Investment wise, I have a policy of not buying in states of stagnation. I wait either for the selloff or the breakout.
Anything with high volatility I am getting out of - like commodities being aligned to China/Idia (exception Coal) supposed continued growth. Though PEs are low for such,I just cannot see em continuing growing at slightly less levels as current. The US has its own problems, which fortunately for them, is not as publicly visible like the EU...although very much a concern. Implementing these austerity/fiscal reforms, with interest rates (in US and EU near Zero) and continued printing of money - there has to be an end game.... Hence, I am switching to defensive stocks: BTI, ASP, NPN, VOD, SAB...and a bit of GFI. Cash for sure...
Goldfield and NPN Defensive? Are you serious? Granted BTI and SAB are defensive, but are sitting at all time high PE's, so would struggle to consider them buys at the moment. Can't really comment on ASP though - don't know what it is? Vod has merit.