ETFs And Allocations To Protect Portfolios In The Current Financial Storm
This is a followup to a previous postings suggesting how investors can take refuge in the oncoming financial storm. If youâ€™ve not done so already, be sure to read my previous post Say It Ainâ€™t So for a description of our dismal macroeconomic picture.
The purpose of this article today is to explore any safe havens for your investments to shelter them from this worldwide slump. What are we protecting against? Problem is, we donâ€™t yet know. And we wonâ€™t until the elections play out next year, and events in Europe unfold.
The market may not wait for the politicians. Technical indicators suggest a very large correction in the market can be expected, and fundamental macroeconoomic trends unfortunately offer no consolation.
How severe will the downturn be?
In my view, that will depend in part on what fiscal and monetary policies we pursue, and how international political relations progress. There my crystal ball is a little cloudy.
Scenario one sees a continuation of monetary easing, as pursued by both the Bush and Obama administrations, and largely aped by European governments to a lesser degree.
In this scenario, the policy response will be pure Keynes, with large bouts of government spending to build out our countryâ€™s infrastructure and hopefully create jobs. The Fed will assist with gobs of money dished out to offset rapidly deleveraging private expenditures and to support our wobbling real estate market.
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