Shameless vanity -- fresh birdcage liner.
...fresh birdcage liner.
This is going right into the cage of my former parrot, g_w...thanks!
The asset classes that are attractive right now are not the rear view mirror bear market and inflation bets, commodities etc. There are a few of those still attractive (some industrial metals, India steel e.g.) but mostly that is just the latest bubble asset being blown far beyond fundamentals.
Instead, the right asset classes are (1) US financials, a generational sale; use dollar cost averaging, don't try to time it just call the level (2) US preferreds, especially of financials and the more soundly capitalized commercial real estate plays; these can be bought today for 7-12% yields, with 8-9 readily achieveable with a mix of credits (3) some foreign banks, notably Barclays and Deutsche bank, and (4) borderline investment grade debt in the US; add a few very long A rateds for interest rate convexity, and (5) soundly capitalized (leverage 4 times or less) commercial real estate, since rents will hold and funding costs are falling like a stone.
All of them unloved because they are asset classes held in the past at high levels of leverage by many of the players currently in trouble.
You can hedge the dollar risk with a few Euro futures if you like. The Yuan is also sure to appreciate and there are Yuan futures available.
Baron Rothschild was asked the secret of his trading success in the 19th century. He replied, "when the streets of Paris are running with blood, I buy". They were in the revolutionary period, the Napoleonic period, in the revolutions of 1830 and 1848, in the coups of Louis Napoleon, in the 1870 war with Germany and commune. All were panics, and all were buys not sells.