The U.S. market is expensive. Yet, the whole world seems to think it is the only game in town. That suggests it may be vulnerable to a sell-off. I hate to short individual stocks because an activist could step in and send a stock soaring. Instead, I would short the SOX, or Philadelphia Semiconductor Index, through the iShares PHLX Semiconductor ETF [SOXX]. I would also short the Global X Social Media ETF [SOCL] and the iShares Nasdaq Biotechnology ETF [IBB].
While people think U.S. stocks are the only game in town, U.S. bonds are still attractive. Japanese government bonds now yield 0.27%. Japan’s government debt exceeds 200% of gross domestic product. Compared to these dynamics, U.S. Treasuries are cheap. Last year, I recommended the 10-year Treasury note. This year, I recommend buying 30-year U.S. government bonds.
VIA Barrons 2015 Roundtable
