Remington likes modest-return munis right now, as well as 12- to 18-month duration high-yield coupons.

Patel spoke of the "boom in leverage around the world," as growth is negative, and said, "We have actually had days like these in the 1940s and 1950s." She said that we are witnessing some of the highest free cash flow we have ever seen, and "if you go back to World War II and the 1950s, earnings get hit, and the stock market gets hit." She believes that China's suppressing commodity prices benefits the U.S. consumer and that we are just rebalancing versus going into recession. So, Patel stated that Wells is allocating to equities and high yield.

Patel said that the she cannot look at any area of the economy and cite vibrant growth. She believes there is a 40 percent chance that we are headed for a recession. "All recessions have been caused by inappropriate monetary activity." She added that the U.S. economy is "not a juiced-up economy like the 80s or 90s" and that the U.S. consumer is not living "high on the debt hog".

Catherine LeGrew, a member of the GMO Asset Allocation team, echoed Patel: "We are expecting stagnation for the U.S. markets over the next seven years." She said that GMO sees prices as being very expensive today. LeGrew said that by retrenching and investing only in bonds and cash, it is highly unlikely investors will keep up with inflation.

GMO's favorite stocks are emerging markets value stocks, developed markets value stocks and high-quality U.S. stocks. LeGrew is also in agreement with other fixed-income managers who suggested limited duration in bond holdings because "we may see an uptick in credit defaults over the next two years or so."

GMO is known for their slightly conservative seven-year forecasts, and she showed that her firm has charted that the only asset classes that will be positive over the next seven years are emerging markets and Treasury Inflation Protected Securities (TIPS) at 20 basis points (bps).

Accuity Capital Management's Howard Needle said, "We think certain segments of the high-yield-market are good right now," citing coupons with a 1.5-year or less duration. "The spreads over Treasuries in high yield right now generate about 650 bps." Needle says that the reality of our financial world right now is that people will continue to be on an insatiable search for yield.

Jeff Davis, CIO of LMCG Investments, referred to capitalizing on a "re-emerging market." Jeff Davis called LMCG's idea about being conservative by looking abroad in an overvalued U.S. market "radical."  Due to the U.S. premium, which he is not so certain is warranted, he views non-U.S. assets with interest.

Bernstein called the world a "Walmart world right now," meaning that everyone is undercutting their competition to try and create market share. "The global credit bubble left the world with massive overcapacity, and bubbles create capacity that's not needed once the bubble deflates," Bernstein said. 

Lisa A. Ditkowsky, CFP, is the president of Pllush Capital Management Inc. and can be reached at (847) 859-2530.

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