Has a bubble really built up in bonds - and how can expats protect themselves?

The Bond market has never looked more bubbly - the iShares Barclays Aggregate Bond ETF (AGG) generated a cumulative total return of more than 23% since the end of 2008. Commodities guru Jim Rogers has tried, at least twice that I know of,  to short bonds (and lost each time). In the men time, sovereign bond yields continue to go lower, the 10-year US Treasury bond yielding around 1.7%, Germany's 10-year yielding around 1.3% and Japan's about 0.6%. In Europe inflation for April fell to 1.4% (per Eurostat) further keeping bond yields low and inflating the bond bubble further. Bill Gross of PIMCO, in his latest newsletter has advised his investors "to continue to participate in an obviously central-bank-generated bubble but to gradually reduce risk positions in 2013 and perhaps beyond" - which is quite possibly the best advice you can use today. My only additional comment would be to reduce risk positions - not gradually as Bill suggests but to do it as quickly as possible. A well structured offshore bond will be the best vehicle to do this.

Robert Prechter, Socionomics expert fears a historic sentiment so extreme it happens "only once in centuries"

Robert Prechter did not invent the Elliott Wave principle, a technical tool for analysing markets  but he certainly has made it famous in Socionomics and through its use in making his market calls which he gets right occasionally. He also writes books and publishes a periodical called the Elliott Wave theorist. An article in the latest (April 2013) issue of the Elliott Wave theorist had me sitting up and taking notice because of a claim it makes that is so outrageous it at least deserves mention, well, in a blog piece anyway. In this article, Mr. Prechter argues, that not a single investment market – be it bonds, stocks, real estate, commodities or precious metals – stands anywhere near a major bottom today, this claim is ok so far, I agree with this part. Its the next statement that is jarring "Every one of them continues to show characteristics of being on the left or right side of a historic top of sentiment so extreme as to occur on average only once in centuries". Mr. Prechter has cited the example of Cyprus when the debt pyramid imploded: "the only valuable asset is cash; if you have it, you are king; if you don’t, you could starve." Either this is fear-mongering designed to sell more of Mr. Prechters' books and periodicals or perhaps there is a genuine warning about an impending implosion in all the investment markets in the near future. Mr. Prechter himself readily admits that he mistimed this call three years in a row but now seems fairly convinced that this "once in centuries" implosion is lurking around the corner.

Mr. Goldfinger gets bitten by Mr. Market

In the classic James Bond film "Goldfinger", the villain (Mr. Goldfinger) professes his love for the yellow metal (see video clip) and claims to get to into any enterprise that will increase his stock. There have been many such Goldfingers who were happy to ride the price wave of Gold until the massive drop of over 9% this week shattered their confidence in the yellow metal. Many of my clients have sent me panicky emails asking if they should dump the metal. Gold is only a holder of value and does not give dividends or interest, so when this perceived value is lost, pandemonium is primed to ensue. The best strategy is to wait out the downturn and do absolutely nothing. Perhaps the classic dialogue between James Bond and Mr. Goldfinger can be reworded thus: "Do you expect me to Sell?". "No, Mr. Bond, I expect you to Hold".

Massive bubble building up in London property market

Property prices in Belfast may be down 50 to 60% from their peaks but London Prime property prices are up 24% from the peak of the last bubble and homes worth more than £5m are now 32% above their peak as reported by the Financial Times. The Financial Times further reports today that much of this demand is driven by overseas investors escaping Eurozone troubles as well as Middle Eastern investors with commercial property sales of £2.75 billion for the first quarter of 2013 alone. As the video explains a bubble of massive proportions seems to be building once again in London prime property and spreading to the rest of southeastern England. Cashing out of this bubble within the next few months would seem well advised.