I too believe the stock market is headed for a recession led downturn over the next few years. I agree with many here that being conservative in the present economical environment is not a bad idea. I view my “liberated equity” as still home equity. In other words, if I still owned a home, would I take some of the equity out to invest in risky things? Probably not. Most who have bought a home in the last two years here in SD have not seen any appreciation (if they were to sell now), so gaining 5% on CD’s or Treasury bills is not so bad.

One of the reasons I like treasury bills is because the gains are not taxed by California. When you take that into account, the return is better than the highest paying CD’s in many cases. Also, I feel a little safer with t-bills. I do have some in CD’s too, however. I think spreading it around a little is safer than having it all in one place.

I can’t remember who said this, but it’s something like “in bad economic times, it’s not how much money you make, but how much money you keep”. In other words, if things really do get bad over the next few years, those who manage not to lose will be far ahead of the rest of the crowd.

As always, please don’t take any of my comments to be investment advice 🙂