Interview: Liz Ann Sonders

Liz Ann Sonders has earned a reputation for her spot-on analysis of the stock market and the economy, and her knack for connecting with individual investors.

What are we to make of this market? I'm not a market timer, so I'm not telling clients to back up the truck and load up. But to me, this smacks of a buying opportunity. I think we can have an up year, but there could be a decent amount of pain between now and then. I expected that this would be a choppier year. But what I find troubling is the mechanics of the market. What's nerve-racking is all of this machine-to-machine trading -- a lot of funky things happening that go beyond fundamentals. I think machines are going to cause more mini dramas.

What will it take to turn the market? Ultimately, it's investor sentiment that turns things. I look at a variety of measures, and it's a mixed bag. Certainly the frothiness that existed at the April highs has been taken down a peg.

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Speaking of frothiness, where do you stand on gold? When an exchange-traded fund is the fifth-largest holder of gold -- it owns more gold than most countries -- that tells me there's a lot more performance-chasing demand than there are fundamental underpinnings for gold at current prices. Will that prevent it from going higher? No. Schwab doesn't cover gold officially as an asset class, but our general rule of thumb is 5% of your portfolio, and be very mindful about rebalancing. (See Gold is Ready for a Fall.)

What do you like in the stock market now? That depends on the investor. I think that this will prove to be a decent buying opportunity, but that doesn't mean every investor should go out and buy. The sectors we think will do better than the market are health care and technology.

Does slower economic growth in Europe suggest slower growth here? We have seen a slowdown on the exports side. But there are offsets: Asia is strong. China is engineering a soft landing. Singapore and Taiwan are booming. And not all of Europe will have a double-dip recession; Germany and France are likely to stay in positive territory. To me, the silver lining to the European disaster is the message I hope it sends: Profligacy has a limit. Government spending has a limit. We may have hit the wall in terms of debt and deficits.

(For more from Sonders, see Schwab's Liz Ann Sonders Tells You to Listen to Your Portfolio.)

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.