If you noticed, I've been quiet lately. US corporate high yield spreads have shot up again. Risk aversion is back and this time the rate of widening is far more than in Feb 2013. We are in for a bigger correction this time.
I'm not too hot about the mining sector and would recommend getting out of mining stocks into something safer, e.g. balanced funds like JPMorgan Global Income, JPMorgan Asia Pacific Income and Schroder Global Multi Asset Income.
I'm also getting out of investment grade bonds and bond funds like AllianceBernstein American Income Portfolio, moving into balanced funds. It scores the worst in terms of return/risk ratio for next 2 years.
I'll hold on to high yield bond funds for six more months.
For the energy sector, things are surprisingly bullish. I'll probably hold on to my Blackrock World Energy and some energy stocks.
But for China, I'm still quite skittish. It's not a SELL, but it's not a BUY either. I guess I'll wait around but not be overly exposed.
On the longer term, equities are still likely to rise further. I dare say for most markets, it should be around 20 - 30% upside. The rally could take us into 2014. But for the next two to three months, it looks volatile.
