2012 Barron's Roundtable Report Card

What is an investor to do in the face of this unpleasant news?
I am sticking with my January recommendations. In the short-term, equity and commodity markets are making a low. They are oversold. The euro zone will come up with new quick fixes later this month and markets will attempt to rally. But I see a cyclical bear market continuing well into 2013.

I would hold lots of cash, preferably in U.S. dollars. While I expected Treasury yields to hit bottom in the fall, I would take some profits and not buy new bonds. Sell the rest in the fall, and use a stop-loss order to protect profits if you bought the 10-year when it was yielding 2.20% in January, as I recommended. Stick with Australian three-year government bond futures. This is a direct bet on China's weakening, and short-term rates could fall further. I also continue to recommend buying gold if it breaks below $1500. That could lead to a quick shakeout into the $1300s, but gold will offer protection in coming years because it is true money.

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