Investment heavy weights, including David Tepper of Appaloosa Management and Ray Dalio of Bridgewater Associates recently shared their market insights with Forbes.
Tepper’s view on the US market is that it trades at around fair value, but that it can “grind higher” barring any major outside event (i.e. a Brexit or something else). The most important thing facing investors right now, says Tepper, is the Federal Reserve. He believes the Fed will be very patient and let some inflation emerge before raising interests rates.
William Conway, the billionaire co-founder and chief investment officer of the Carlyle Group, compares the US economy to a “slow-moving freight train, it has underlying strength and momentum. Though we expect anemic 1% growth this year, adding an average of 200,000 plus jobs a month over the past five years shows the economy’s staying power.”
Bridgewater’s Dalio doesn’t expect another 2008-like financial crisis, but the high level of debt renders monetary policy less effective. Further, he thinks future returns will be below average, thus impacting many funds’ ability to meet their liabilities. Dalio states that he “expect[s] the world economy to be in an extended period of stagnation.”
Mary Erdoes, chief of J.P. Morgan Asset Management, compares and contrasts today’s markets to market environments we have seen in the past. She thinks that unlike the 80s and 90s where the market saw long periods of multi-year rallies, today’s market is more like the 60s and 70s, “where we see non-directional, muted returns over several long stretches of time.”
Jeffrey Gundlach of DoubleLine Capital favors intermediate bond funds and says the US stock market, which looks overvalued, is “the last man standing”. “There are times when capital preservation is a good idea and I think this is one of those times,” says Gundlach.
Rounding out the field of experts is perhaps the greatest investor of all, Warren Buffett, and in classic Buffett style he doesn’t give a market prognostication but instead this advice – “Read ‘The Intelligent Investor,’ and during major market declines,” he says, “read it again.”