I've recently been very lax in keeping up with the news. Last I heard, Dubai caused a minor stir in the already-screwed up credit markets, sending markets into a tizzy.
I saw on today's newspaper the big headline, "Mortgage Rates at All-Time Lows." Sheesh. Haven't we seen this TV show before?
Must we go down the same stupid road that got us here? I know, the credit standards are supposedly much higher now than they were in 2006-2007, where anybody with a pulse (and some even without) could get a loan for a piece of property. But I have heard random radio spots that hint that things really haven't changed much. Stuff like "no money down," "seller financing," and "no doc" loans…
I'm afraid we haven't learned a thing from our very recent past. I can't say I'm surprised.
The fundamentals of the market psychology hasn't changed: It still seeks short-term profits over long-term prosperity. Slow and steady hasn't kept the market happy for decades. It likes the hare, not the tortoise.
I also saw that gold hit $1200.
So how does one protect himself during these times? I'd suggest that you stick with the same old, same old:
- Stocks – still the best bet for long-term prosperity
- Cash – in case all hell breaks out
- Bonds – if interest rates ever go up again, they might become a little more enticing
- Gold – in case it gets worse than all hell breaking out
- Real Estate – your real inflation hedge
Depending on where you are in your life, you would do best to keep the bullk of your investable assets in stocks, some in cash, a little in bonds, very little in gold, and a bit in real estate. Note that I am not including your home in this assessment. If I did, most of us would have more than 50 percent of our assets in real estate (which might be a big part of the problem, right).
I still think the US is the place to be for innovation: IT, bio tech, medicine. But I think you may want to invest a considerable portion in foreign markets. China will not stop growing for some time. India is still going to improve. Latin America still has lots left, as does Canada, Russia, and Europe.
The world, as they say, is your oyster. Choose wisely, or else you may get one that's toxic.