Leading U.S. financiers shared with The Wall Street Journal their views on the future of global markets. Although experts differed in many respects, they agreed that the turbulence in the markets is not over yet, and a financial tornado may occur…
Prepare for chaos
The founder and CEO of Capstone Investment Advisors, Paul Britton, advised to get ready for new crazy fluctuations in the markets. According to the expert, rising interest rates will continue to create volatility and there will be little protection against it.
Britton noted that even the U.S. Treasury’s ten-year bonds, normally considered ultra safe, have become more volatile. This, in turn, means the need to rethink its investment strategy.
“The strategies that have worked best for the last 15 years are not necessarily going to work for the next 15 years,” noted the head of the company, which manages $8.9 billion in assets.
Britton stressed that there is now a structural shift that hasn’t happened in decades.
Wait for the peak of pessimism in the markets
Research Affiliates founder and chairman Rob Arnott believes investors should wait until market bottoms before buying assets. In his view, markets have not yet reached their lows, and the value of the S&P 500 Index now stands much higher than it did during the 2007-2009 global financial crisis.
“I’ve been called the perennial bear. But I’m a ‘bear’ with respect to expensive things. I don’t want to bother buying them, even though they might go up in price,” he concluded.
At the same time, Arnott stressed that the problem is that determining when fear is at its peak – when prices have nowhere else to go but up – is almost always a matter of guesswork.
It’s not as bad as it seems
The former head of Goldman Sachs, Lloyd Blankfein, who ran the bank in the crisis years of 2008 and 2009, believes that the outlook for the markets is not so bad. He listed several events from the past that were “just as bad,” such as the Cuban Missile Crisis of 1962. In his view, the problems of the present always seem more complicated than those of the past, and history, like markets, has cycles.
“There is so much bad news that people underestimate the fact that there is some credible good news that can positively affect the market,” Blankfein observed.
In his opinion, markets not only reflect the current state of the economy, they also look ahead.
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