The Fed announcement yesterday should not come as a big surprise.  What is interesting to me is that they are trying to be very transparent about what they are looking at when making rate decisions.  They gave us a specific target of 6.5% unemployment before they let off the gas pedal.  Some are concerned that once we start seeing growth, that it will be difficult to slow it down and that will lead to rampant inflation.

While I am concerned about inflation from the monetary side, there is still so much structural over capacity and efficiency gains from technology and global income differentials that I think inflation will be tame - not zero, but tame.

Given that framework and combining with the talk of austerity in some form in the US.  I still believe bonds should be a reasonable percentage of the portfolio.  I am speaking mostly of government bonds, because I am thinking that stocks are a better buy than corporate bonds.  On a spread basis, corporates look attractive, but on an absolute basis not so much.  If you want to dabble in JNK or HYG, that's ok, but recognize it will have a high correlation with stocks (they will go down if stocks do) without the same upside.

Here is a reasonable counter argument to mine:

http://seekingalpha.com/article/1063391-the-fed-the-evans-rule-and-the-validation-of-a-paradox?source=intbrokers_regular

The problem I have with this counter argument is that the only argument for higher rates seems to be that we are so low (and so we must have to go up).  I am not so sure.

I see 2 probable risks to my view:
1) growth returns before we expect (unemployment down surprisingly fast) in which case I think stocks will go up substantially (hence my weight on stocks being up substantially from 9% to 24%)

2) US becomes less credit worthy.  Big problem if this happens and I just don't know where to hide if this happens.  I don't put a high probability on this because there would have to be a credible foreign alternative to put your money into and I just don't see it.

MHN, despite a recent cut in dividends is now attractive as most of the premium has gone away.  I am re-buying the amounts I sold up at $17.

BBY and JCP have been a trading bonanza.  I unfortunately missed out buying on the last drop as I was distracted.  I think there will be more to come.

S had a drop to 5.52 where I think it is an excellent buy given the deal.  It has since rallied, but keep an eye on it and look to accumulate.