Investors Waver on Exit Strategy

In Financials on November 9, 2009 at 19:01

investor exit strategyDollar-driven asset bubbles have created imbalances in the financial markets sending mixed signals to investors. With the gold value at all time high levels and the ‘greenback’ on the Mac menu, investors wonder whether this is the time to pull back of the rally.

For how long will commodities keep rising? Rogue investor Jim Rogers sees no ceiling for the gold and other commodities anytime soon, arguing the build-up of inflationary expectations and the push from emerging markets. With the US government trying to solve the crisis with more debt, we don’t seem to have learnt from our mistakes. Creating artificial consumption may be the quick way out of the crisis but it will trigger new ones.

Investors are pondering on Fed’s exit plan instead of focusing on their portfolios exit strategy. A lot will depend on Fed’s commitment to zero rates cause as soon as rates start to increase, the dollar will rebound and bubbles will deflate. I say the asset party can still go on but don’t ride with it too long unless you carefully hedge out risk.

by the Self-Seeker



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