Investment Strategies for the crappy Economy

Assumptions:

1. I figure that the stock market will not grow much and will trade sideways for some time.
2. Municiple/state bonds will not be as safe as advertised because governments have spent way too much and bad economy will result in less tax revenues from income, sales, and businesses.
3. The governments current "print money" policy will eventually create inflation!

Choose a diverse portfolio of index mutual funds:

• Domestic - 30% (VFINX or SPY)
• International - 20% (EFA or EAFE)
• Fixed Income/Bonds, MMA - 30% I think more should be placed in International and decrease the amount in fixed income by 10-15%
• Other - 20% Gold (GLD or Tocqueville Gold Fund)
• TIPS - Treasurydirect.gov or PIMCO Harbo Real Return Inst. Fund or Vanguard Inflation Protected Securities - side note: I think the gov't CPI measure has been adjusted down during the 1990's and does not accurately reflect true inflation, thus making TIPS less of a protection against inflation.
• Oil and Energy - (XLE, Vanguard Energy Fund) less than 10% because of volatility. note: I think you can invest more here because the world needs more energy in the future and the price will be going up from today's prices. Could be a good hedge against inflation during another energy crisis.

Taken from "The End of Prosperity" best book ever!