By all accounts, it has been a tough year for the dollar, a really bad year for bonds, and a complete wipe out for gold. As Michael Cuggino, president and portfolio manager at the Permanent Portfolio family of funds sums it up, "investing in anything other than stocks hasn't worked this year."
At least not yet. While hints of a possible end to the two-week impasse in Washington have momentarily restored investor appetite for stocks, the shunning of safe havens won't last forever.
"It's been a very good year for equities, a year where stocks have outperformed corporate earnings and economic performance," Cuggino says. "That alone is a risk factor for stocks."
This is not the mindset of a doom-and-gloomer who has turned his back on the stock market. On the contrary, it is more a call for balance and diversification in the face of an all-or-none environment.
"We would advocate a diversified approach," he says, "combining safe haven assets, like precious metals, short-term government bonds, and high grade corporate (debt), with more aggressive growth vehicles like equities, for a more balanced overall return."Read More »from Revenge of the Safe Havens: Day of Reckoning Will Come, Says Cuggino