Felix Salmon, finance blogger at Reuters, says that in today's risky economy one can no longer rely on the old "buy low, sell high" traditional investment strategy. In order to minimize risk in the possibly "bimodal world", he says, it is best to take an outlook that cash is king and an option on the future.
In that world, an opportunistic wait-and-see approach makes a certain amount of sense: you wait to see which direction the bandwagon is moving, and then you jump on it. You'll miss the first part of the move, but at least you won't end up getting crushed.
Is this the best strategy to survive the turbulent markets?
He also makes a case that equities are safer than high-grade debt.
Liquidity, here, is key -- and equities in general are very liquid investments. Here's the plan, then: sit on a portfolio of large-cap US stocks for the time being, and maintain exposure, if you have it, to expensive, fast-growing markets like Brazil. But look for market moves, and create a list of "tripwire" signs that the waveform has collapsed and we're moving in one direction or the other.
What do you think?