Taking Stock Of Risk-Reward

It looks like many are missing the bus, including myself. The equity markets seem to have stopped falling. While many, like me, are still waiting for the other shoe to drop, the chance of markets moving higher seems to be better. Are we in for a change of tide?

Apparently, we cannot fight the central banks no matter how strongly we are against their policies. This is the whole crux, buyers of shares now think that they have the world central banks on their side. The zero weighted investor think that the central banks have created a recipe for disaster down the track. Both can be right, unfortunately. I would not fault those who would buy now. As for me, I can think of better ways to do with my money. To me, the risk still overwhelms the anticipated returns. I cannot stop people playing 4D even though I know the odds are very shitty.

What we have:
a) Central banks pumping liquidity to save "unattractive assets"
b) Dubious financial instruments being whacked senseless, pricing in a lot of risk already, which is a positive in a rebound
c) USD policy will create havoc in UK, Euro and Australia - already similar bailout plans are afoot in UK and Australia. As for the E.U., its a bloody time bomb, they cannot operate with such an overvalued currency
d) If its not going down, it should be going up - that's the prevailing mentality currently, which can be a dangerous premise to base investment decisions on

My biggest contention is the mix of : weak USD; oil at US$120; food prices through the roof ... isn't that enough to derail the sustainability of growth in any markets? Mind you, I am not refering even to the subprime / credit implosion thingee - we have a new monster working itself into the "good growth markets now". Something's gotta give. There is only so much currency appreciation the Brazils, the Malaysias, the Thais can take to avert inflation. There is only so much subsidy to give to control prices. Something's gotta give soon. That is why I say to buy now would give me a disproportionate risk-reward ratio. I rather play the horses with my money.