"They've had their dead cat bounce," says Jordan, "but at the end of the line, the trends of the business aren't that exciting. They still have to raise capital. Regulation is coming. Fundamentally, that sector is still in a bear market."
Financials "seem to have gotten ahead of themselves," Higgins concurs.
Bonds are another tricky area. Interest rates are so low it would be hard to cut them further. Economic worry my have kept bonds popular, but eventually inflation fears could spark a sell-off.
"Investors who are in Treasurys who did well last year because of a flight to quality have not done as well this year at all because of the rates coming in," says Latif. "So investors in more investment grade credit or even high yield credit bonds have done a lot better this year. And while mathematically you can't repeat those type of returns going forward, we think that investors who are in higher yielding assets on bonds-not necessarily high yield bonds but also bonds that are really attractive yields-will be rewarded for owning those types of bonds as opposed to Treasurys."
Commodities are another area of interest for some managers. Latif says that commodities are not only getting a boost as a store of value in a world where paper currencies are declining but that they will also see more demand as developing countries consume more.
Jordan also likes commodities, though he's trimmed back a little because of high valuations. "I want commodities that are coming out of the ground where I believe there is a secular supply problem. Demand may be lousy right now. That will normalize itself.
You know, we didn't suddenly discover something to use other than gasoline to drive our cars," he says. "Iron ore. Copper. All of these things we still need on a daily basis, that we'll especially need as the economy reaccelerates and as more money gets put in the infrastructure, which is inevitable."
Mills compares the ailing economy to a patient on a table-now that he's been defibrillated, how do we stabilize him? That's going to require looking at assets in dynamic new ways. "Do we go back to the way we were or do we go back to something different?" he asks.
Looking to the past has become difficult. Maybe if we want to learn from it, perhaps we must learn only to be contented.