If you are under allocated in stocks, is it too late to catch the "dip". I think there is still some room for US stocks if you are watching it diligently . It is breaking through a trend line and may have some legs (see chart).

However, I would stay away from European and Japanese stocks as they have bad systemic problems. They may get a relief rally, but they have serious, serious problems the governments are trying to gloss over. Now, even the mainstream media is coming around and talking about it.

On another note, I just sold a convertible bond today, Sandisk due 2013, for a profit. We purchased a lot of convertible bonds, and other bonds, after the "big scare" and "sky is falling" 2008. The spreads between Treasuries versus corporate & munis was huge, and everyone believed Yankee doodle was dead, and we were doomed. We purchased many bonds at discounts, and are now much higher.

Interest rates came from 20% in 1981 down to historical lows, and the long term cycle on dropping interest rates is over. The long term trend is up, so I am slowly over the next 2-4 months, moving out of bonds and toward commodities. I think the risk in bonds is increasing every day, especially with the printing presses in overdrive.

Therefore, a fundamental shift away from bonds is in order. Food for thought.

Keep studying,
Dan Stewart CFA®