The courage to sit tight.

Natixis economic research has a very sharp man in Patrick Artus, who has put out a research piece which describes a problem that many sensible investors face today. What happens when investors no longer want to buy anything?s (10 December 2009 - No. 542). Patrick asks "Could investors reject all asset classes?", and concludes yes.

Today, one could imagine a situation where investors no longer want to buy anything despite the abundance of liquidity:

• Emerging country securities and commodities since their valuation is excessive after the recent rises;
  
• Equities or credit in OECD countries due to the prospect of an inevitable decline in consumption;
  
• government securities due to the deterioration in public finances;
  
• Agencies or covered bonds, which have become too expensive relative to government bonds.

So if all other asset classes are rejected, there might be precautionary investment in liquidity and short-dated securities for a period of time.

These days I'm feeling pretty much the same, very little to strategically invest in, except cash. Within the REIT space it is pretty much a similar situation. Most equity reits are expensive for what you get, and overpriced if the economic situation gets worse. Only the blind pools have a compelling story, which is growth by deployment of capital without distraction from legacy debt/investments.