Most investors remain focused on irrelevant daily news items including Bernanke, various other central bankers worldwide, the sequestration issue, and other data which has nothing to do with the future behavior of the global financial markets. Whenever the financial markets are forming either a top or a bottom, expect it to take several months or longer. It won’t be a V-shaped event.

Presently it makes sense to sell high-dividend stocks which have once again captured the public’s admiration. These are instruments such as REITs, tobacco shares, utilities, telecommunication companies, and similar darlings of financial advisors which are likely to suffer years of underperformance going forward.

The 34% rise for VIX was the most important feature of trading on Monday Jan.25.2013. It highlights that investors are quick to panic at the earliest signs of a stock-market retreat. Ironically, this means that additional declines will likely last for only a short time. If we were in a true bear market, as in September 2007, investors would treat each pullback with excitement instead of depressed feelings. All true bear markets are disrupted by progressive stock-market weakness being perceived with persistence of complacency.

Safe-haven assets including the U.S. dollar and U.S. Treasuries are quite expensive given their typical behavior in the final stages of any multi-year equity bull market during an era of stagnation. The Implied Volatility Index (VIX) has been increasing before it drops to its lowest point in almost six years.

Don’t get too wrapped up by what will happen in 2014 and 2015. Keep focused on 2013. You want to be a selective buyer of the most oversold and undervalued equity subsectors into weakness. That would be precious metal and raw material ETFs.

In our view, we won’t have a meaningful stock-market decline until far more flock traders become more heavily invested in risk assets and they start unloading their TLT positions and any other safe-haven assets.