The Guest Blog

Yoshikami: How to Invest in a Volatile Market

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Market volatility never seems to end. And that's the cold hard fact that investors need to recognize; volatility will never end and it is a permanent part of the investment landscape.

So how do you invest in this new environment? Having a perspective on macro events is an important foundational step.

We continue to watch developments in Europe as well as the economy in the United States and China. And based on our observations, we are investing portfolios for our clients that reflect our economic and market views.

The rally this week is real. The sustainability of the slope is not.

will zigzag and one needs to be tactical in this environment.

So given current conditions, here's how we are investing:

Europe: Europe is cheap and might pay off if you guess correctly which asset to buy. For us, though, there is just way too much drama for us in the euro zone. We're not buying Europe.

United States: As tough as it is for the gloomy prognosticators to swallow, conditions are improving in America. Yes, we have huge deficits and high unemployment. But despite these ills, the United States economy is still fundamentally stronger than most. Why is it when the world is afraid, they buy gold and US treasuries? It's because the world knows the U.S. isn't collapsing.

We're buying dividend stocks like Johnson & Johnson , technology companies like QUALCOMM and Apple , and retailers like Costco and Amazon . Tailwind industries such as technology and trade down retailers are great places to allocate capital even after this week's market rally.

In the United States, we believe the trading range for equities to be between 10,500 and 12,500 for the Dow. We tend to be more cautious in investing equity assets closer to the upper threshold. When you allocate your capital keep this range in mind as it will provide a guide for how quickly to move money into the market.

Latin America: Investing in Latin America is a bet on the emergence of a larger middle class. Commodity production will continue to fuel economic growth and we believe countries like Brazil are well positioned to participate in this trend.

Japan: Too many problems. A falling birthrate, increasing average age, a strong yen, and problems in the banking system make this country unattractive to us. We are avoiding Japan.

Asia (except for Japan): In general, we like the region's growth prospects though we believe it is critical not to become overly enthusiastic when strategist pound the table that the future is in Asia. There is no doubt Asia will continue to be a strong growth engine for the global economy.

Still, understand that markets often move differently than economies and ; expectations drive market performance. Be cautious and selective when you invest. Markets and economies can diverge and often do. Asia is no exception.

We like Singapore, Korea, Malaysia, and Indonesia. These 4 countries each have different profiles that help you capture different sectors. In Singapore you participate in global finance and trade. Korea provides the opportunity to participate in a strong consumer market as well as electronics exports. Malaysia is a country rich in energy resources. Indonesia, with its commodity assets, continues to move forward towards establishing a more robust middle class.

Commodities: The correction in commodities is an opportunity. Food commodities and industrial metals will advance as inflation picks up and global growth restarts.

Gold:Never underestimate the power of fear; emotion will drive the price of gold higher. India and China will continue to increase their consumption of gold for ornamental uses. And central banks will continue to have doubts about the solvency of the United States/Europe and diversify currency reserves to gold holdings.

Fixed income: We are mostly in short duration corporate fixed income.

We are of the belief that there is a Treasury bubble and we are avoiding longer maturities on the expectation that inflation will ramp up.

Considering the massive influx of phantom dollars by governments and central banks, it seems likely that the seeds of inflation have already been sown.

That's our map. Of course it's more complex than this on an operational basis but these are the general themes we are pursuing. What's important for you as an investor is to understand what themes matter to you. Invest based on changing conditions and tactically adjust; that's what's necessary in today's very volatile market.

Michael Yoshikami, Ph.D., CFP®, is CEO, Founder and Chairman of YCMNET's Investment Committee at . Michael is a CNBC Contributor and appears regularly on the network. YCMNET is a San Francisco Bay Area-based independent money management firm that provides fee-based wealth management services to institutions and individuals around the world. Michael was named by Barron's as one of the Top 100 Independent Financial Advisors for 2009, 2010 and 2011.