Investors are now faced with a dilemma. Where do they place money in an era of financial repression? Do they chase Treasury yields which are now in bubble territory? Or are there safe havens still available in the stock market? I thought I would never see the day where the yield on the Dow Industrials would exceed the yield on a thirty year Treasury bond. The current stock market correction has brought the PE multiple down to 12 on the Dow Industrials and raised the dividend yield up to 2.8%. Treasuries may be seen as a safe haven but they are also fraught with risk. What happens to the price on bond funds when yields eventually rise?

The worries that plagued the market over the last two years still remain: Europe’s debt difficulties, a hard landing in China, turmoil in the Middle East, and the U.S. fiscal cliff. All of those problems still hang over the market, Europe is in a recession, China’s economy is slowing down, and many of the BRIC countries are seeing economic growth soften as we are now seeing in the U.S. To make matters worse…

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