The answer is: find the main driver in the markets and figure out how to use it. In this case (click on chart to enlarge) the driver of the stock market is pretty obvious: it’s the devaluation of the dollar, as I showed on this blog and later in a study for Asia TImes Online.
Daily data for the stock market vs. the dollar index year-to-date form a nearly straight line (and yes, I ran the Granger Causality test, and it shows information precedence for the dollar index). Monthly flows from overseas into US equities also rise as the dollar falls (click to enlarge):
Dollar hedges (gold, oil, raw materials) have outperformed the broad market, which makes sense, given that the dollar is the overall driver of the market. If there is to be any growth in the world, moreover, it is more likely to come from China than from the US — so the aggressive growth component of a portfolio should be Asia-centered. Otherwise some high quality fixed income is desirable in case of another major downturn in the equity market.