Sectors of Safety Are Emerging

08/15/2012 9:30 am EST

Focus: MARKETS

Mary Anne & Pamela Aden

Co-Editors, The Aden Forecast

Domestic and foreign markets remain “risk on” for the most part, but there are some emerging US sectors that are getting attractive, write Pamela and Mary Anne Aden of The Aden Forecast.

The markets have been frustrating lately...they’ve been volatile and skittish. Few markets have established
solid investing trends, but as you’ll see this month, the situation is slowly improving.

April 2011: Change Started
We’ve taken the action as it comes, but it’s a good idea to stand back and look at what’s happened over the past couple of years.

Up to April 2011, all of the markets were rising together, and that continued following the 2008 crisis. The Fed was stimulating the economy with its QE programs and the markets liked that.

The US dollar was the big exception because it was falling. About a year ago, the environment suddenly changed. The Euro crisis started heating up, and this marked the beginning of difficult times. Most markets fell as uncertainty and fear took center stage.

A rush to safety gripped the markets. And despite the fact the US credit rating was downgraded from its AAA status, the US dollar rose. It was seen as a safe haven, primarily because other countries were in bigger trouble, and it is the reserve currency.

In recent months, the markets started settling down somewhat, and we began seeing signs of a subtle change. Some markets started rising and others appeared to be bottoming. And while it’s still too soon to be sure, several are showing renewed signs of strength.

Buy a Bit
The bottom line is that we’re starting to buy into some of these stronger markets and diversifying for the first time in quite a while.

As you see, we feel it’s warranted. If we’re wrong and this proves to be a false alarm, we’ll switch back to only safe-haven investments. For now, most signs are giving the okay to wade into some of these potentially good markets.

Meanwhile, the global situation remains volatile, and we realize that’s a risk too. But we generally tend to be cautious and again, we feel it’s a risk worth taking.

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