Given the volatility afflicting the global economy, is there anywhere worth investing in at the moment?
Given the volatility afflicting the global economy, you might be wondering whether anywhere is worth investing in at the moment.
Most of the major markets have taken a caning, and only a brave investor would argue that the problems caused by the credit crunch and liquidity squeeze are over.
Markets were heavily oversold last week, but a subsequent dip in the oil price and rally in banking stocks has lifted the FTSE 100 to within tickling distance of 5400.
No way UK.
Good news, maybe, but I still fear this is yet another false start, and wouldn't put my money into UK PLC right now.
I swapped most of my UK investment funds for cash a couple of months ago, and see no reason to regret my decision. House prices have further to fall, the economy risks recession, consumers are downbeat and if unemployment starts to climb then shares will surely fall further.
I'm also wary of Europe. A few weeks back I also sold Fidelity European, one of my favourite investment funds, fearing slowing growth and mounting inflation could hit its returns. And so far, it has.
China crisis.
Oh, and I also waved goodbye to First State Asia-Pacific and Henderson Far East Income investment trust. Thanks for the profits, boys, but soaring oil prices and inflation, and shrinking Western demand for exports, could make for leaner times ahead.
I expect the long-term shift in wealth from west to east to continue, but it can carry on without me for a few months.
China could prove me wrong. Its inflationary problems have been well-documented, but with the country's stock markets having tumbled, many of its problems have already been discounted. So maybe…
And I'm still fighting shy of Japan, despite recent efforts by some to talk it up, we've all been waiting far too long for that story to revive.
Bored with the USA.
So where does that leave? Well, there's always the US. Several analysts have tried to big up the US economy in recent weeks, presumably on the principle that as it was the first country to succumb to the credit crunch it should therefore be the first out.
Perhaps. But the bad news keeps rolling in, with falling house prices and failing mortgages pushing the two largest US mortgage lenders Fannie Mae and Freddie Mac to the brink of insolvency, forcing the government to put together a rescue package.
If one of those was to go under, it would make Northern Rock look small beer.
I feel Latin America has done too well for too long to put any money in now, although I'm hanging on to Blackrock Latin American investment trust, if only out of gratitude for the 200% growth it has given me in just three years (although that has since slipped).
To Russia with a sigh of relief.
So we come to Russia. This is one of the few territories to escape the credit crunch unscathed, thanks to its plentiful supplies of oil and gas, and its newbie middle class should help keep the economy ticking over. Its companies are still relatively cheap, typically trading on a P/E ratio of around 9.
That's why I'm hanging on to another investment trust favourite, Baring Emerging Europe, up 126% since I bought it four years ago.
So what about sectors or themes? Oil and commodities have driven stock markets recently, but I'm loathe to invest in case I'm buying just before the bubble bursts.
Oil and food.
At a loss for some positive news, I called Mark Dampier of Hargreaves Lansdown, who tipped a theme I've never actively considered -- infrastructure. Countries such as India and China are frantically building infrastructure, while many countries in the West urgently need to upgrade theirs. First State Infrastructure, launched last October, is his tip.
Dampier also believes agriculture is a strong long-term story, because an ever-hungrier world needs feeding, and recommends commodities and agriculture fund Sarasin AgriSar, launched in March.
And that's it. Two obscure, recently-launched funds with a lot to prove. It's not exactly a ringing vote of confidence.
I recognise it's madness to try to time markets in this way, because when the lift-off does come, it will catch everybody by surprise.
Perhaps it started at the end of last week. If so, I'm going to look very silly. But right now, I doubt it.
More: Profit From Food Price Rises | Ten Top Trackers
If you disagree with Harvey and think now is a good time to invest in the UK stock market, take a look at index trackers -- a cheap and easy way to invest in shares.
