There are a number of economic problems on the horizon, old and new, and has generated a debate starts about whether to start a 2012 rally runs out of fuel. Greek debt problems, other tricks that China slowing and persistent unemployment and foreclosures in the United States, that the problems are widespread and varied widely.
Oh, and now there is a danger of a war in Iran - not only sent a shock on energy markets. But could seriously regional trade and investor risk appetite interfere in the cold.
Has the stock market crash in 2012, when he did last summer?Maybe. But, as we saw in 2011, the drastic decline was caused in part by the U.S. debacle roof of the debt, not destined to last forever. Actions and the economy were recovering very well and quite fast. So do not take these problems as signs of a severe recession and the long term, even if it led to short-term losses.
However, it is advisable to protect themselves. Finally, some sectors are more affected than others, as you can see a downward trend in world markets. Here are three areas that need to be careful this time - if you're a bull or a bear - because such investments will be most affected by a downturn in the markets:
China Stocks
There are many red flags in China now. The value of sales of land in 130 Chinese cities by 13% in 2011, China Real Estate Index System. "Rise" of the automotive market in China grew by a meager 2.45% in China in 2011. In February, the fourth consecutive month of decline in the Purchasing Managers' Index HSBC important indicator of the manufacturing in China.
It is true that China continues to grow. But it is always slower. On Monday, for example, has established its China growth targets for 2012 to 7.5%, down from the largely symbolic uses a rate of 8% during the last eight years has been.
This rate is almost double or triple any other major economy in the world... But for investors who have set expectations so high, any slowdown could be painful.
Morgan Stanley China A Action Fund (NYSE: CAF) has risen sharply in early 2012, tripled some 16% of Dow Jones. The iShares FTSE / Xinhua China 25 Index ETF (NYSE: FXI) is also dramatic, almost 13% since the beginning. Some of the largest individual Chinese stocks surged and the height, with 8% in 2012 profits of China Mobile (NYSE: CHL), gains of 17% of Baidu (NASDAQ: BIDU), and a whopping 26% of the oil giant CNOOC Ltd. (NYSE: CEO in) 1 January.
It looks like these signs of increasingly negative to be considered?
This region may be pessimists wrong, but even if you do, you need to calculate a healthy dose of optimism is already baked into the camp of China. Been exceeded in a scenario where Chinese stocks in recent months, the benefit is lower and the decline is much more serious.
If you really believe in China, continue with multinational corporations such as Yum! Brands (NYSE: YUM), or General Motors (NYSE: GM) for playing the growth without diversifying. Investment in shares of pure-play China right now seems unstable.
Bonds
One could be the link current environmental hysteria about a "bubble". But again, you can end up with a pretty accurate description.
Although interest rates are low, costs a little more debt - and what's wrong with the loan? And while the stock market remains volatile, the risk is relatively low looks attractive from the bond market - so what the problem is in hiding in bonds?
Well, you can see how this will play cycle. More debt will be offered. More people buy it. This remains low. The more debt on offer. Then, more people will buy...
The bubbles that people feel good at first, because they seem to make money. The problem is that often not aware of a bubble, until it is too late.
Do not play chicken with the bond market. It's just a matter of time before interest rates rise - which makes some people have difficulties, loans, or even worse, to service its existing debt. This is the bond market quickly spiral into another direction.
This could not happen this month or this year. But it will happen someday. Do you really need more warning signs than the 10-year Treasury yields to their lowest level after the United States for its debts last year and suffered a credit downgrade?
All links are blocked, of course. AAA credit rating of the safest countries such as Canada or Australia for tax purposes, do better, and of course keeps some corporate bonds, bullet-proof - it is true, leave their low yields much to be desired. However, some high-yield corporate bonds, commonly called "junk" - could be very risky. And if the sovereign investors a turn for the worse could.
That's not to mention the debt to pay, say, finally, the back, but at a rate which is also disappointing for investors who are not better than money. I mean, a 2% annual return on T-notes? While the current inflation rate is 2.9%? Does not occur on the site.
Be wary of relying too heavily on bond markets. Dealers have favored bonds over the past few years, with many investments that are doing very well. But that could change soon.
Small-Cap Momentum Stocks
The logic is simple: if the conditions are favorable, showing small and quick Wall Street firms, the largest gains. They have more value from their operations grow rapidly. Investors and push them up in increasing numbers.
However, if the conditions in the south? The dynamics of small-cap stocks are the first to deteriorate.
This dynamic has already begun to decline. The Russell 2000 Index, the company is pursuing with an average market value of $ 738 million, adding 2.3% last month compared to a gain of 4.1% in February for the S & P 500, the members on average 25.9 billion $ in value. This is one heck of a disparity.
Of course, there are some small caps, swim further upstream, even in a difficult environment. The cliché that "it is the stock market-picker" is a more true when the handful of titles that work better, you select to happen. But in general, small businesses have a hard time as a decline in income before mine - especially when they are up to nosebleeds evaluations of investor optimism.
Temple Company (NYSE: TPX), which increased 50% in the first two months of the year. Of course, profits and sales are strong... But to think that the $ 1,000 mattress is still selling like hot cakes when the oil price reached $ 150 per barrel and maintain macroeconomic fears creeping in?
Or fashion warehouse Crocs (NASDAQ: CROX), who made a comeback with 33% of the execution of the year so far in 2012? Is this the kind of small-cap diversified and innovative you want to be cared for when the music stops?
The Small Cap Growth investment is in strong bull markets hurt, but can you so much on the way down. If you're not sure of the market, are of high momentum stocks with small market caution.
