Fed Game Changer: Long-Term Positive?

No matter what the Fed does, don’t get suckered back into the whole market.

So says Doug Cliggott, Dover Management CIO and a former JPMorgan strategist who called the market massacre in 2000.

Cliggot tells Fast Money if you’re not holding stocks right now, “sit tight because there's too much risk.” Instead he says “be in cash. And if you want to add risk to portfolio right now, there’s much better value in high-grade corporate bonds than in stocks.”

However, if you already have equity exposure, Cliggot thinks the best places to be are healthcare, consumer staples and electric utilities. (In other words, places that are not very cyclical.)

What’s ahead?

Cliggot warns investors to be careful of early 2009. “We have no idea what hedge funds are going to be doing early in the year. There's a lot of money locked up that's not behaving in a free market way.”

He says it looks like 2009 is going to be a rough year. “Hopefully a year from now the market will be making a bottom and 2010 would be a good year to invest in stocks.”

If you watch Fast Money regularly you might remember that on October 24th Cliggot recommended keeping only 20%-30% of your money in stocks, especially if you’re approaching retirement.

Following is how he recommended allocating your money.


Cliggott's Strategy For Today's Markets

Stocks 20% to 30%
Commodities/Currencies 10%
Inflation Proteted Bonds 20%
Long/Short Strategies 15%
Cash 30%


"If you look at profit margins over 40 years you see an entire cycle takes about 7 years," explained Cligott to the Fast Money gang.

"It goes up 4 years and down 3 years. In the up cycle you make a lot of money and in the down cycle you don’t. Right now we’re 2 years into a down cycle. If this is an average cycle, margins will bottom next winter. That’s when you’d want to get aggressive in stocks."

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Trader disclosure: On Dec. 16th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (DIS), (MCD); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (MSFT), (PM), (MO); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (USO); Seymour Owns (AAPL), (BAC), (EEM), (F), (GE), (INTC), (MER), (SSL); Seygem Asset Management Owns (CHL)

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