What will investors do when they suddenly awaken to the fact they are being fooled?
In his most recent musings for Livewire, ‘When the music stops and Buffet stops buying equities, what do you do?’, our newly appointed Portfolio Manager Jerome Lander asserts that in the face of underlying risks and precarious market circumstances, it’s time for investors to consider “increasingly compelling” alternatives to traditional equity strategies.
With real growth slowing around the world, governments have ignored the need for necessary political and economic reforms, instead turning to easy money “bandage solutions” in an attempt to prolong a fragile economic cycle in the short-term, according to Jerome.
This could result in further misallocation of capital, economic stagnation, low returns and even a sudden collapse of market prices.
He warns against the temptation to continue to speculate on this year’s “superficially benign” market price action, driven by disconcertingly low interest rates, major market distortions, and a fear of missing out.
Numerous signs suggest the ten-year bull market will eventually come to an unedifying end. Many renowned investors are also beginning to show concern and adjust their portfolio allocations accordingly – even famed equity investor Warren Buffet.
The good news is that through a diversifying and thoughtfully constructed investment strategy, advisers have a genuine alternative to prudently manage their portfolios in the best interests of their investors. Absolute returns in line with clients’ objectives can be achieved with much lower equity risk – protecting clients’ hard earned savings and their easy come / easy go gains in an otherwise stagnant market.
A full version of the article appeared in Livewire on 5 August.