Gyroscopic Investing

Forget for a moment whether you believe equities are overvalued and will crash. Assume that they will. Where do you think the money will go instead?

After the tech bubble burst, it flowed into real estate, and then when real estate crashed it flowed back into the stock market. I'm tempted to think it will go right back to real estate because I don't know that legislation has fundamentally changed anything. Attitude wise the government is still trying to prop up real estate and views high housing prices as "good." And then the average American has a very short memory when it comes to bubbles, especially RE bubbles where you've got an ingrained belief that RE is always a solid investment.

I'd say into cash.  RE is no good except under high inflation.

Maybe high yield junk bonds and cash.

But of course, it would go into Japanese stocks!  Japan is due to bottom next year.

In 2008, the money flowed into gold and Treasuries.  Good chance that will happen depending on the circumstances of the stock crash of course.

sophie wrote: In 2008, the money flowed into gold and Treasuries.  Good chance that will happen depending on the circumstances of the stock crash of course.

Pretty please!

Gold or dare I say, bitcoin?

In all honesty, I am looking forward to a stock market correction and rebalance opportunity.

I think stock funds are going to flow to international stocks...the US experience has not been the global experience the past couple of years. Many markets are down 20+% from highs, generally not a bad place to buy.

Exactly, why not take advantage of the strong dollar and buy foreign assets. But anything Eurozone or Russia I am keeping away from. I am going to harvest a short-term loss in a heavily Eurozone weighted ETF I own, and redeploy it to China/HK and India ETFs, EWH and EPI. I would've just gone with Schwab SCHE emerging ETF, but 3% Russia... WHY??? 

Kbg wrote: I think stock funds are going to flow to international stocks...the US experience has not been the global experience the past couple of years. Many markets are down 20+% from highs, generally not a bad place to buy.

Kbg wrote: I think stock funds are going to flow to international stocks...the US experience has not been the global experience the past couple of years. Many markets are down 20+% from highs, generally not a bad place to buy.

Interesting take regarding international stocks. However aren't most stock markets are correlated pretty well? If the USA starts looking shaky I'd be surprised to see money flowing into equities of any kind. I'm thinking we'd get total capitulation in the emerging markets if the US corrects (as in 2008-09) as they're at attractive P/E's but holding on for dear life (just like gold stocks).

Mike59 wrote:

Kbg wrote: I think stock funds are going to flow to international stocks...the US experience has not been the global experience the past couple of years. Many markets are down 20+% from highs, generally not a bad place to buy.

Interesting take regarding international stocks. However aren't most stock markets are correlated pretty well? If the USA starts looking shaky I'd be surprised to see money flowing into equities of any kind. I'm thinking we'd get total capitulation in the emerging markets if the US corrects (as in 2008-09) as they're at attractive P/E's but holding on for dear life (just like gold stocks).

QE in the Eurozone has already sparked a 15%+ increase across the major indexes (Germany, etc.).
The falling Euro and strengthening dollar have muted international investments in USD terms (unhedged mutual funds). Lets hope that gold or treasuries are the beneficiary of the equity outflows.