Where Are Markets Headed? Six Pros Take Their Best Guess
Heavyweights in the world of finance, from Jeremy Grantham to Lloyd Blankfein, describe their view of the future amid lots of uncertainty. They agree the wild ride isn’t over yet.
By Gunjan Banerji, Sam Goldfarb, Justin Baer and Akane Otani, The Wall Street Journal, Oct. 29, 2022
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Investors should wait until markets have hit their bottom to buy, says Rob Arnott. And that hasn’t happened yet, in his opinion…
Lloyd Blankfein, who steered Goldman Sachs through the brutal 2008-09 financial crisis, said the market’s outlook may not be as dire as many believe…
Volatility is here to stay. Paul Britton thinks many investors’ portfolios are riskier than they appear. He expects rising interest rates to keep stoking turmoil, with few corners of the markets sheltered from the pain. Even bonds, typically thought of as a safer investment than stocks, have grown more volatile. …
Investors are clinging to the belief that inflation will dissipate soon, says Nancy Davis. They shouldn’t, in her view. She is preparing by holding mostly inflation-protected bonds and options tied to interest rates…
“This is about as bad a package [of fundamentals] as we have ever seen,” says Jeremy Grantham. For average investors, he says, holding cash is among the best options. He rejects the mantra that you shouldn’t try to time the market, pointing out several examples from history when it took years, or even decades, for markets to recover from crashes… [end quote]
Even though stock prices have dropped, the CAPE is still almost the same level as it was on Black Friday, 1929 – almost twice the historic median.
The recession hasn’t even started yet and stock prices aren’t depressed since GDP and employment are still doing well.
Cash is losing purchasing power due to inflation but I-Bonds and a ladder of short-term TIPS will adjust for inflation until the situation stabilizes, which could take years. Once the Fed stops raising rates, longer-term Treasuries and TIPS will reduce risk since their values will rise once interest rates begin to fall.
Speculators who like volatility will probably have a field day – but that’s a risky course.
Wendy