The time to consider going underweight equities will come if and when we get a leg down on a W shaped economic recovery. The folks at Credit Suisse think the economy could dip back into a shallow recession caused by

<<<1- the Fed Reserve raising interest rates to soon
2 -funding crisis develops for bank lending caused by competition with the UST for funds
3- world economy, led by China, slips back into recession>>>

My thinking on the Fed policy has changed. I am no longer convinced that the Fed will implement a policy change to higher rates sooner rather than later.

I used to believe that they would be looking for the slightest excuse to raise rates back to neutral. Based on the most recent Fed statement I now think that the Fed will wait till it has solid evidence of sustainable economic growth before it starts to go back to a neutral policy position.

So I think that the market will climb higher following the news of an improving economy. I don't think the market will be aggressively forecasting a recovery - instead - for the next year, until we see how 2010 is shaping up,

I think the markets will have to overcome the skepticism and fear and make its price gains on the back of real earnings growth and real economic recovery. In short , not concerned at this time about inflation....

This is the best kind of bull market. It will climb a wall of worry as skeptics slowly but surely become convinced that it is safe to come back in.The shorts have been taken to the cleaner and the worse is yet to come /

Meanwhile spg continues to hold high 60's over a three month period now and shows no sign of abating.

Thrash Man