In general, I'm not a fan of U.S. equities at this time. While additional stimulus from the Federal Reserve will expand the money supply and quickly direct this newly-created money into equities, thus boosting equities in the short-term, I suspect the rallies from stimulus will be less and less each time - or that larger and larger doses of stimulus will be needed to generate an increase in equities.
Ultimately, I do believe stimulus will have the impact of sending the dow/gold ratio down, but primarily by sending gold prices up rather than sending the Dow down. The point in which the futility of additional stimulus will become very apparent is when the cost of living rises faster than equities - thus making equities a losing proposition. As the Dow is up just under 8% on the year while Nasdaq and S&P 500 are up under 6%, I think we may be very close to that point now.
There are, however, two areas in the field of equities that I favor, and think can do well even in the midst of the global sovereign debt crisis and the inflationary response from central bankers. Those two specific areas are:
1. Stocks with a high dividend yield, high earnings per share, and a market capitalization of over $1 billion. I believe these metrics may help these stocks earn a reputation as being something of a safe haven instrument, which the global economy is desperately seeking at this point due to the abject failure of government bonds. At the time of this writing, the equity instruments traded on U.S. exchanges that best meet the criteria are Cellcom Israel Ltd (CEL), Terra Nitrogen Company (TNH), Suburban Propane Partners (SPH) and NuStar Energy (NS). Cellcom in particular is trading at a P/E ratio of just 7.17; with a dividend yield of 13.56% and an EPS of 3.74, and the stock seems very underpriced on the basis of financial metrics, in my opinion.
2. As a person whose approach to the financial markets is rooted first and foremost in global macroeconomic analysis, I prefer to identify which sectors will do best, and then invest in ETFs designed to capture returns in those sectors. Single stock selection is not my forte, and so I only take very small positions in single stocks when I do invest in them. As for ETFs, though, I think the gold mining sector is remarkably underpriced. GDX and GDXJ are my favorites. GDX is for the large, stable and productive gold miners, while GDXJ is the junior miners index that brings greater risk as well as the potential for greater reward.