What Next?

With the financial markets in a state of confusion for the past two weeks, what is in store for investors? Investors have been left wondering as to how they should grow their wealth. The traditional forms of investment are not working. The mantra of stocks/bonds mix is proving to be a disaster. Underlying all of this is "Correction". Markets were over heated in the period 2000-2010. In reality an economy is expected to grow in the range of 2%-5% with an inflation rate of about 2%. Markets have deviated way off from the economic fundamentals. Investors got lured in the rising stock markets based on anticipation and expectations that are completely unreal and not based on fundamental growth rates. The mismatch will seek correction and also instill volatility as there is panic and confusion. Also adding to this confusion is the inability to assess the damage likely to be forthcoming from the European economic woes.

In this state of confusion, an average investor is better off creating a portfolio mix that has some % allocated to precious metals like Gold. Invest into growing countries like India, Brazil and China. Stay away from Europe for some time until confusion resolves.