Sunday, May 15, 2011

Risk-on or risk-off; bullish or bearish - what happens next?

In recent weeks, the tone among investors has become more cautious. Their list of concerns include 1) what happens at the end of QE2, 2) the volatility in commodity prices, 3) the potential of a "double-dip" U.S. housing, 4) a decline in the price of Copper since mid-February and 5) inflation remains at elevated levels in various regions of the world. With increasing concerns of "stagflation" - where inflation is high and economic growth is low, many investment strategists are positioning for a bumpy ride over the summer months.

MY TAKE: It seems that a prudent approach to the markets is warranted. At times like this, consider the words of investor Ken Fisher from several years ago - "the market is 'The Great Humiliator' that lives for the one sole purpose which is to humiliate as many people as possible for as many dollars as possible for as long as possible".

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