I state from the first shot that I am NO stock market guru.
However I believe we are in a run up. It makes sense that we are. DOW 3800 in mid 2010?
Yipes. I think best shots are in cash and really high quality bonds. Slow pay money market if high quality.
Above are scenarios from the best respected economic forecasters if you follow those. I think the rug is fixing to get jerked hard by late 09-early 10. I DO NOT buy or sell stocks anymore at all, but still follow some leads on it and follow some previous trends. The biggies make money on the way up, and the way down. Watch out.
Nor do I buy gold or silver, nor do I invest in foreign currency. I have not found any metal that is edibile.
If one is a stock market investor, well tuned, intelligent, in the know and on the go–well I supose they will be ok, and I certainly wish them the very best!!! 🙂

I’ve also had a lot of shares called away, and more are closing ITM this week. I’ve put some of that cash to work in put spreads, a bearish strategy. I would only do that with a fairly simple stock, not with a major conglomerate or ETF, though. I have one on ANF.

HSpencer: I, personally, do not buy bonds except when Fed-directed interest rates are sky-high. Bonds are “cheapest” when interest rates are very high; they become fully valued when interest rates approach zero. Since interest rates are at historic lows, the value of the bonds cannot but decrease. Short-term bonds (maturing before the Fed raises interest rates again) may be a different story. This is an American perspective; substitute your central bank of choice.

As an inflation hedge, I prefer timber; I own stock in PCL (Plum Creek Timber). Plum Creek sells lumber, mineral rights, and usage rights (power lines and wind turbines) associated with its land. It also has an attractive dividend.

Dividend Growth Investor: I agree; there’s an opportunity cost associated with not owning stocks. I also hope the market drops from here, though the dip may be more shallow than March 09; the people who are kicking themselves for not buying JNJ at $45 (me) will pile in.

I have the same nagging feeling as Jacob, but the few individual stocks I own are still at decent P/Es – none above 15 – and all have good yields. So I may hang around awhile and just take the dividends. I don’t have any huge positions so options aren’t in my toolbox yet.

I tend to err in the direction of holding on too long. I think I’m going to take this opportunity to sell one stock with a sky-high P/E ratio and with dividends cut to nothing and invest that money in my mortgage. I may even do the same with my stock that has a reasonable P/E ratio but whose dividends have been cut in half.

I have too few years left on my mortgage to make refinancing economically feasible even though my interest rate is 6.625%. Since I’m at the 15% marginal income tax rate (in a state with no state income tax), that’s an effective mortgage interest rate of 5.63%. (I’m pretty sure that my property taxes plus charitable contributions now exceed the standard deduction. My state has high property taxes.)

Of course that means I can’t really get at that money for 3 years. Another idea is to use the money to make renovations earlier (at possibly still recession/panic prices).

Where the market is going is a tough question. Realistically we should still be going down but psychologically things never head in one direction for ever.

I wrote two long posts on the stock market that you may find interesting. I was wrong on September 🙂 but am willing to bet a nice steak dinner (cooked on my backyard grill) that the market will be lower in a year than it is now.

http://www.askthewealthsquad.com/blog/stock-market-prediction-year-2009/

http://www.askthewealthsquad.com/blog/why-you-should-get-out-of-the-stock-market-now/

Leveraged muni bond funds may not be a bad idea to invest in. I have been in and out of BFK over the past couple of years. Pays a nice tax free yield. They have others that are specific for states with high tax as well.

Correction, I meant, “the commercial mortgage situation”, not the commercial loan situation.

I’m going to wait until the velocity of money picks up before I sell stocks.

With all the money that has been pumped into the system and still is being pumped in, eventually there will be a nice rise in EPS when the velocity picks up.