The world’s best fund manager, GMO, does not mince its words at City Wire:
Value investment specialist James Montier of US asset manager GMO has reduced risk to levels not seen in his fund since 2008.
…‘This is definitely the most difficult time to be an asset allocator. It’s very hard to find value…2007 and 2008 we had about 80% of the fund in non-risky assets. This has been the first time since that we have had over 50% in very liquid assets,’ he said.
…Montier said he is currently breaking up his market view into three different ‘hellish’ situations.
Firstly, there is a kind of ‘stable’ hell, for Montier this is the worst and least likely situation, where rates stay low over a long period and volatility and as such entry opportunities are minimal.
Then he describes something near to purgatory, which, Montier said, is the most helpful environment for investors. This is where he sees the market still moving between a low interest rate and a rising interest rate scenario.
The final of the three scenarios is an ‘unstable’ hell, where the market goes in one direction but keeps getting back off of course.
…‘Investors are constantly asking me how long I’m going to keep the cash position and what is going to be the ultimate trigger for reducing. I can’t say that, it does worry me if we are in this stable hell environment but at the moment, I think it’s best to stand a bit and hold onto some dry powder.’
That about sums up my thoughts on the matter. Grexit and Shanghai freeze as imminent risks and if they work out, US rate hikes.
