Wareagle I should tell you that I do not believe interest rates in the US will rise no more by .25-.50 by the end of the year ( watch they skyrocket..LOL).
The US economy could be in trouble if rates were raised to quickly; for instance look at the real estate market, and the number of people that have taken equity loans out on their homes; the consumer is in debt, this seems to increase as the years go by, the fed will keep rates as low as possible.
also inflation is not a huge problem....at this time, however would be concerned if the US dollar weakens further.
if interest rates have to be raised be fight in inflation and slow down the economy would want some money in base metals and small holding in gold stocks, this is assuming the economy is booming and the fed is worried about inflation.
defensive stocks may be good to go into such as healthcare, people and government have to spend money on healthcare.
would lower holdings in financials.
more importantly than the sectors would prefer low PE stocks in a rising interest rate environment, as PE ratio are often lowered in an rising interest rate environment. not a good time to hold a portfolio of stocks with 40-80PE.
would avoid long term bonds in this environment.
should state I agree with your idea that techs are getting overvalued. however they still may go up, Nortel was not cheap at $5cdn. but it is now over $10cdn. people can fall in love with these stocks.
A stock like RIM and NT are fully valued but they may continue on their run, since this year profits and revenue will climb the momentum may take them higher. I just use stops.
by the way must look at the overall health of the economy than the interest rates; Japan is a prime example of this.
thanks
selkirk
