In the medium term - the prices of stock markets are driven by capital flows. Even the price of a money losing company is going to go up if the pension funds[1] are buying it.<p>Central bank pulling liquidity out when they finally realise their monetary policy is only making the inevitable worse, will mean a lot less money to flow into various investments.<p>Therefore, avoid investments that have gone up in the past few years, that went up because of monetary policy (e.g. direct central bank buying, lowering of reserve ratios, lowering of interest rates). Avoid government bonds, avoid municipal bonds, avoid companies that have leveraged up for stock buybacks, ruling out S&amp;P 500. Avoid companies whose stock prices are fueled by margin loans (e.g. tech unicorns). Avoid energy companies that have been limping along because they keep borrowing at low rates. Avoid companies with debt.<p>In January 2016, the only sector that fulfilled all of these requirements were the junior gold miners - the collapse of gold prices since 2011 has wiped out all but the strongest gold mining companies. They have little debt, high margins, lots of cash and very profitable compared to their share prices. The junior gold mining stock index GDXJ[2] has went up 111% in 3 months.<p>Of course, now that they&#x27;re going up, margin loaning investors are piling in, and it&#x27;s no longer as safe as a rock as it was in January 2016. I&#x27;d wait and see if GDXJ corrects back to the mid 20&#x27;s, and then I&#x27;d buy more. (I have 130% of my portfolio in gold miners at the moment, so I&#x27;m biased.)<p>The next sector to look for is overseas iron ore and oil producers. When finally the collapse of iron ore &amp; oil prices has wiped out all the highly indebted and poorly performing companies, you will see the strongest of the bunch go on fire sale shopping spree. Those will be good buys. I think it will happen in 12-24 months. I think we&#x27;re currently still in the clean up phase at the moment - lots of dead man walking companies hanging on desperately. The Chinese stimulus plan that lit a fire on iron ore prices in the past 2 months is going to prolong this phase for a while yet.<p>[1] Pension funds are big.<p>[2] <a href="https:&#x2F;&#x2F;au.finance.yahoo.com&#x2F;q&#x2F;bc?s=GDXJ&amp;t=1y" rel="nofollow">https:&#x2F;&#x2F;au.finance.yahoo.com&#x2F;q&#x2F;bc?s=GDXJ&amp;t=1y</a>