Having run hard for the past few years, the economy looks ready for a cup of tea and a lie-down and opinions vary as to how long that lie-down will be.
National Party leader Don Brash says the country could be headed for a deep sleep (recession) while Fletcher Building
chief Ralph Waters thinks it's more likely to be a light afternoon nap - if at all.
What cannot be disputed is that weaker economic data and plummeting business confidence suggest a period of restricted growth is likely.
So choosing profitable investments is likely to be that much harder. If you are looking to grow your nest egg, the strength of the dollar and its likely fall over the next year are crucial factors to consider.
Many commentators say it's only a matter of time before the currency drops and, with that in mind, think people should go for a double play on offshore equity markets, which look much healthier and offer the prospect of a currency gain when the kiwi falls.
Larger investors, such as AMP, have reweighted their portfolios in favour of global equities and brokerages, such as First NZ Capital, have been advising their retail clients to do the same - and it looks as if they're listening.
Sharemarket activity in January, traditionally a quiet month, was significantly lower than for the same time last year and NZX attributed this to a flow of funds offshore.
However, some commentators warn that investors should be a little cautious about leaving home. ANZ National Bank chief investment officer Kevin Armstrong is not convinced the strategy will deliver.
"The danger in that is you're lumping two investment views together in the hope of achieving one investment result," he says.
"If you do think the dollar is going to depreciate, then you probably do want to put the money in a foreign currency account or something like that.
"It would be unfortunate to jump out of the New Zealand sharemarket, which has been one of the best performing in the world, to jump into the Japanese market only to find that when the dollar does weaken the Japanese market may weaken even more."
UBS research chief Richard Leggat says having some money overseas is worthwhile but unless an investor has a lot to play with, they may be better off staying closer to home.
"Investors are likely to have much better knowledge of local stocks than they will have internationally."
Investors can, of course, look to managed funds and let the experts do the work for them. But New Zealanders are continuing to opt out of that investment class.
That's hardly surprising considering the far bigger returns available from residential property and fixed-term, interest-bearing products such as finance company debentures. The plentiful supply of investor funds during the good economic times has seen finance companies grow an extra layer of fat that should see them through any lean times, but there's no doubt some will come under stress.
Fund managers have been taking pot shots against rivals, warning that those with a big exposure to the speculative property market could face problems if prices flatten or dip.
And the latest data on Kiwis' great investment love - the residential property market - shows that it is indeed coming off the boil. But if the Reserve Bank sees fit to begin cutting the official cash rate because economic activity goes into reverse - and mortgage competition continues between the banks - housing certainly won't be out for the count.
The cup of tea and lie-down hasn't worked? Still got a headache? Then perhaps an Aspro is required.
Residential property
"The time for the quick buy and flick has disappeared," says BNZ chief economist Tony Alexander.
Alexander concedes he has been "mildly bearish" about residential property for some time. Although his earlier warnings have proved premature, he still believes negative factors will weigh on the market, probably later this year.
Those negatives include low migration flows, slowly rising interest rates, an easing labour market, an oversupply of new properties, investors getting tired of negative cashflows and selling up, and a fall in the dollar scaring away overseas investors.
Yet Alexander says residential property may still be a sound investment under the right circumstances.
"If you can get the rental yield, then go for it, but if you can't, then be a bit wary because the scope for capital gains is fairly limited at this point in the cycle."
Property market analyst Kieran Dass believes there is still some capital gain upside left in residential property, albeit not of the same scale of the past three years.
He says key economic drivers indicate whether the boom will continue or end and how sharply it will decline.
"For the next year, it's looking sound."
He expects to see at least 5 per cent or more annual growth in property prices this year in most parts of Auckland. But now is not a good time to speculate in residential property. He also says some areas are looking particularly risky, including Auckland's CBD apartment market, some small towns, and coastal properties.
Overseas stock
"If you want to look for capital gain and growth, you've got to look offshore," says Grant Williamson, of brokerage Hamilton Hindin Greene. Those wanting to benefit from the predicted currency gain as the kiwi falls later this year could take the easy route and invest in one of the NZX's offshore exchange traded index funds such as the WINZ world index and the MOZY mid cap Australian index fund.
But if you've a mind to do it yourself, the first place you're likely to look in terms of offshore investments is Australia. It has the advantage of being closely followed by New Zealand retail brokers, meaning there is plenty of research available.
Resource and energy stocks have proved particularly popular as global demand continues to grow and put pressure on prices.
"The way India is just starting to get pumped up, and China is still looking extremely good, it's not out of the question that the resource sector stays as the place to be for a while yet," says Williamson.
But AMP Capital Investors international and diversified fund manager Andrew Brockway warns: "There could be a wee bit of volatility in global equity markets because there are a couple of things on the radar; oil prices are a little bit bumpy and earnings are slowing."
AMP anticipates annual returns of about 9 to 10 per cent from its offshore investments. "It's not stunning but it's what you'd expect over the long run."
New Zealand stock
"Those looking for more safety should look for stocks that benefit from a dollar depreciation and ones not overly exposed to the domestic cycle or that have some international presence," says Tyndall Investment Management domestic equities manager James Lindsay.
However, Lindsay warns against an "absolute" approach.
Just to say you only want to look at defensive industries and get out of those that might be exposed to a domestic slowdown is a poor way of looking at investing.
Some stocks that have a defensible income stream might be priced too high. On the other hand, stocks that you might expect to suffer in a domestic downturn - such as retailers - may already have that risk more than fully priced in and be trading at a discount to their intrinsic value.
UBS research chief Richard Leggat is similarly sceptical about picking defensive stocks by sector, especially in small markets. Having said that, he points out that tourism stocks appear to be struggling.
"Given the currency is still a bit high, we suspect that there's probably another six to 12 months of the sector having things a little bit tough."
Leggat says investors should be looking closely at utility stocks "where there's decent dividend support and where valuations are reasonable.
"You look at companies that have got good market positions that are perhaps less sensitive to consumer spending."
In that regard, UBS likes Contact and Vector. "They have come a long way off their highs, so we think they are reasonably priced, they've got a solid earnings outlook and have reasonable dividend yield support."
Lindsay likes Guinness Peat Group, which has an unhedged overseas asset base.
"So, if the dollar depreciates, you've got assets offshore which are going to go up in New Zealand dollar equivalent value." Lindsay also likes exporters including Fisher & Paykel Healthcare.
Commercial property
"We're getting late in the cycle for commercial property" said AMP's Andrew Brockway.
AMP Capital Investors core portfolio is commercial property.
"Looking at our funds, which are fairly high quality buildings, you're looking at a yield of about 8 per cent and there may be a little bit of upside in capital appreciation so, again, you're looking at about a 10 per cent return which is still quite attractive."
UBS' Richard Leggat agrees locally-listed property outfits have been strong performers and the sector is now quite fully valued.
"But there appears to be an ongoing funds flow into the sector and there's certainly a risk of further consolidation."
After posting stellar returns during the past couple of years, Brockway said AMP was not expecting a great performance from global-listed property securities.
"From the point you're starting from, they're a little overvalued."
Cash
Bonds tend to do well as growth is slowing, AMP's Andrew Brockway says. "So New Zealand should be good relative to overseas."
And with interest rates as high as they are here now, cash in the form of short-term bonds and term deposits is still quite attractive.
David McEwen, managing director of the independent research company IRG, also says cash looks "relatively attractive" in the short term. "There's a realistic chance that interest rates will start to come down again, so people who buy into mid-term bonds could expect to see some gains there."
ANZ chief investment officer Kevin Armstrong said cash was tempting at the moment because of the 7.5 per cent short rate but the question was how long that would last.
"If we do have a more meaningful slowdown, the cash rate will come down much faster than people think."
He believed trying to get 6.80 or 7 per cent in a high-quality corporate bond for the next five years might be a better bet heading into a period of softer growth. But he emphasised it had to be a high-quality bond "given the danger of something falling over if we have a recession".
Gold
Gold is a volatile and unpredictable investment at the best of times, says Clare Goldsworthy, of Auckland bullion dealer AGR Matthey. "It's hard to know what it's going to do."
If the international price of the precious metal holds firm, and the dollar depreciates, then an investment in gold will pay off. Whether it pays off more than holding overseas currencies depends on their moves relative to the price of gold.
Gold is relatively easy to deal with but most experts don't recommend it as a direct investment. It doesn't pay dividends and there are costs involved in storage.
Yesterday, gold was trading at US$547. While the price of gold might have nearly doubled in the past five years, its 10-year average return is still 2.2 per cent compared with the local sharemarket's return of 10.4 per cent.
Foreign exchange
Trading directly in forex markets is at the extremes of speculative investments, Earl White, of Bankcorp treasury services, says.
"It would need to be, depending on the sophistication of the investor, a relatively minor part of a diversified portfolio."
Currency volatility compared with other forms of investment is extreme.
"It's far too risky in my view. Leave it to the professionals."
Having run hard for the past few years, the economy looks ready for a cup of tea and a lie-down and opinions vary as to how long that lie-down will be.
National Party leader Don Brash says the country could be headed for a deep sleep (recession) while Fletcher Building
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