My Recent USA Market Strategy

image: stockinvestor.com

USA stock market has been rising consistently for the last nine years making it the second longest bull market in the US history as the average bull market lasts about four years. This and many other valuation signals -- price to earnings, stocks valuation to GDP etc. -- make it very obvious that the US stock market is due for a bear. 

I came to this realization last year November and promptly sold off all my US stocks and put the money in US bonds, international market bonds and emerging market stocks. But two months ago, I began feeling uneasy with my emerging market stock positions. Usually, whenever the US stock market tanks it drags with it the emerging market stocks as investment firms rebalance their portfolios by repatriating investment fund from their foreign (usually emerging) markets to acquire more of the depressed developed markets assets. The funds from that sale I put into a Gold ETF. Gold usually rises when stocks tank.

Then this week I became worried again. I had read that the bond markets are artificially propped up by government spending, especially the US bonds. Seeing how well even the Nigerian foreign bonds were snapped up, I needed no further evidence to see that even the international markets bonds I have are likely overpriced. So I sold off the bonds -- both the US bonds and the international market bonds. And while searching for which investment to put the funds from the sale into, I settled on PowerShares Deutsche Bank commodity index tracking fund, DBC. Commodities are the most likely asset group to gain from stock crash and DBC is a basket of 14 of the most popular and most liquid commodities in the world. So I decided to also sell off my Gold ETF and put the whole money into DBC. 

And that is an elaborate summary of my current market sentiment and strategy. I strongly believe that the US stock markets is going to crash soon as it has been over-inflated by government money (quantitative easing) and low interest rate, and now that the US government is already discussing reducing their balance sheet while increasing interest rate, both stocks and bonds will fall.