Dear Reader,
Dow Jones Industrial Average broke through 18 000 points. The (Christmas) rally goes on. As I have stated many times in the blog, I expect a correction of >20% for the S&P 500 and even more for the Nasdaq in 2015 or 2016 at the latest.
That said, I predict the correction will not be abrupt, but gradual. So it should be a good idea to have a basket of predominantly value stocks and some tech stocks in the mean time.
The German bonds are trading at 'ridiculous' yields. I expect their yields to go up in the long-run. For now, however, they could be stuck in a tight trading range. The short to midterm US government bonds with maturity less than 5 years should sell off before/shortly after the Federal Reserve hikes the Federal Funds Rate.
I expect China to ride smoothly through the Federal Reserve tightening cycle. The Chinese economy has critical mass already, that should allow it to sustainably develop with the help of domestic consumption. India should also cope well with the Fed tightening. Brazil should have a mixed experience.
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Bulgarian National Bank!
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Hi,
ReplyDeletethe US stocks and US real estate made a good return for 2014. Commodities tumbled. It might be due to the fact that some countries are exporting deflation...
Lesson learned - having a balanced portfolio I did not lose, but I did not earn anything either.
Shorting bonds and stocks was not a winning strategy for the past several years.
VIX is at very low levels. Value at Risk is low. Black Swan insurances cost less (gold, the price of shorting, asymetric trades, cash).
We have to remember that cash is also an insurance, priced in today's terms of interest rates very, very low.
So from this perspective it might be a good idea to have more of those low priced insurances, giving up some earnings on the long side.