As 2011 began, we moved into a new decade. No one needs to be reminded that the first ten years of the new millennia were turbulent and troublesome. This new decade is opening with a sense of optimism and signs of economic life. The equity markets have responded with a pick-up in returns, which accelerated toward the end of the last quarter. Spurred on by further monetary stimulus in the US, UK and perhaps the Eurozone, a resurgence of corporate earnings may prompt a reduction in high unemployment rates. This in turn could result in a more stable period going forward.That is what the financial indexes are suggesting. Look at the table of a few market statistics to illustrate the point.The broader indexes indicated solid returns, moving into the double digits. The US equity returns were better than Euro and the UK, and were close to the Emerging Markets for the year with the US showing greater momentum in the last quarter.The Mid-cap and Small-cap indexes outperformed the Large-cap indexes, with a bias toward the Growth over Value style of investing. Consumer Services and Industrial Materials led the sectors, while Health Care and Utilities lagged returning 8.2 percent and 2.72 percent respectively.Without being too statistical, the equity gains did not bury the bond returns for the year. On a very general basis, the Morningstar data reported high single digits of 6.2 percent for their Core Bond index and 9.8 percent for their Long-term Core.Their US High Yield Bond index reflected equity returns at 15.6 percent for the year and 3.2 percent over the last quarter. The Morningstar Core Bond indexes were in the red over the last quarter of 2010, with the Core -1.47 percent and the Long-term -4.63 percent. Bond prices have had a spectacular two-year run and are likely to deflate as investors shift their attention to equities.Indications are that a rotation is under way in the economic cycles. There are four stages in the cycle: recovery, peak, contraction, and trough.The economic indicators are still giving mixed signals, however overall unemployment has softened and manufacturing is improving. Governments are doing all they can to support their economies. Investors in the financial markets tend to anticipate trends. They are looking ahead and driving the stock markets.On this basis, stocks of cyclical companies are likely to benefit, with the commodity sector enjoying continued support. We are also likely to see improvements in the consumer discretionary sector, which had suffered the recent recession. The US market is expected to return double-digits again this year, while returns in commodity driven emerging countries continue to balloon.As confidence in the economy grows and as investors become more comfortable, they will venture further into equities. The bond market is likely to suffer. There are few bonds available with an attractive yield, so investors will be prompted to look afield. If and when inflation reignites, longer-term bond prices will be under significant pressure. However, it looks like that is still a few years away.Uncertainty in the equity markets has subsided, as measured by the VIX an index of volatility. This does not mean that an economic recovery is certain. However, the probability of improvement is higher and moderate improvement is likely. It makes sense to increase the exposure to equities by making calculated investments. An increased emphasis into the US in this first quarter seems prudent.Bond markets will be less attractive, however US Treasuries will be the fall back whenever there is a stumble or scare in the world events. Overall, there will be more support for the dollar. There is a possible political downside to the dollar should the new US Congress stall on the extension of the debt-ceiling.What does this all mean to you as an investors? It is time to reassess your investment policy. Take a look at the percentage of your assets in equities versus bonds. Balance any immediate income needs to your longer-term objectives.See if it is time to shift more assets from cash and bonds into equities. Stay diversified and invest with caution while keeping your expenses low. That is where you will really capture returns over the long-haul. There is still a strong case for portfolio protection, utilising options to guard against market shocks. It is definitely time to keep your eye on the ball and review your status at least quarterly. We are in a rotation, but it may not be smooth over this coming year.Patrice Horner holds an MBA in Finance, a FINRA Series 7 Licence, and is a Certified Financial Planner (CFP-US). Any opinions expressed in this article are not specific recommendations, nor endorsements of any productions. Individuals should consult with their banker, insurance agent, lawyer, accountant, or a financial planner for advice to address their personal situations.