Investors need to be bearish and constantly on guard as volatility and uncertainty are going to make buy-and-hold a strategy of the past, says Jeff Sica, chief investment officer of Sica Wealth Management, adding he is "hopelessly bearish" on stocks.
Lately, Federal Reserve commitments to keep interest rates low and financial systems awash in liquidity have investors happily snapping up stocks, but uncertainties lurk around every corner that could trigger a massive selloff.
"I think the new risks have a lot to do not necessarily what we already know about, because we already know about Greece — Greece is old news. It's what's going to happen next," Sica tells Fox Business.
_________________________________________________________
Obama Donor Banned This Message
First Google put $803,436 into Obama’s campaign coffers. Then They Denied this Video
But you can watch it here
Watch, learn, and receive a free Survival Guide ($49 value) for your personal financial future.
_________________________________________________________
"Italy is going to become a major, major issue primarily because it hasn't been looked at. The market has become very short-sighted. So Italy is going to become a major risk."
Italy is home to a much larger economy than that of Greece, although fears surrounding Rome's finances have eased in wake of a European Central Bank move to flood financial institutions with liquidity.
The Federal Reserve has vowed to keep the dollar spigot open as well via interest rates low and may resort to another round of asset purchases from banks, a policy known as quantitative easing.
In two previous such rounds, the Fed bought $2.3 trillion in Treasury holdings and mortgage-backed securities from banks and hasn't ruled out a third round, known widely as QE3.
While quantitative easing is good for stocks, it also applies inflationary pressures to an economy, and Sica says he's tired of Fed language, which hasn't changed really in months.
"I think the Fed, at this point, it's almost like hearing the same song over and over again. You can like it at first, but then after you listen to it for a while then it becomes a little bit old and somewhat nauseating," Sica says.
"I believe wholeheartedly we will see QE3 and these statements that Ben Bernanke made — which were basically 'I'll catch the market if it falls' — were indicative of the fact that now investors have this sense that as bad as things can get, no matter what happens, we'll have a central bank that will be there to catch us with the printing press roll."
For Sica, investors need to be wary that events can change quickly, as gold, once a hot commodity that went out of favor amid a rush to the dollar in late 2011, has become a good investment again.
"The key to this market is it's fast, and things can change on a dime," Sica says.
Other experts that agree that gold is quickly regaining its luster, especially in wake of Bernanke's commitments to keep rates low.
"The trigger offered by the Fed definitely helped," says Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, according to Bloomberg.
"The opportunity costs of holding gold will remain low in the future and this should boost the attractiveness of gold. We don’t see an end to the long-term uptrend in gold prices."
Gold prices have risen by close to 10 percent in January.
© Moneynews. All rights reserved.