Jean-Marie Eveillard, one of the most veteran Wall Street money managers, who unlike many peers, happens to have a lucid view of the economic landscape, was featured in this great interview on MarketWatch:
Most money managers were brought up in the market after 1982. They learned concepts which are now being tested such as:
- bear markets last for no more than 5 minutes (or 1 quarter)
- the Fed will provide support to the market during serious downturns (called the “Fed Put”)
- All market dips are buying opportunities
- Inflation is under control thanks to newer smarter monetary policy
- S&P 500 Index PE of 18-20 is “average” and offers a good value to buy at
These among other beliefs will be and are in the process of being the undoing of many investment managers as we ramp up what could be one of the worst financial dislocations any country has gone through in a long time. If you don’t believe me, let me as you two questions:
1. Do you have enough spending money to save appropriately (15%+ of income) and pay off all your bills?
2. If you are not saving enough now, are you expecting an increase in your income over the next 6-12 months that will allow you to do the above level of saving?
If both of your answers are no, then you can see we are headed for trouble. Where is the solution coming from? ……..I don’t know either…oh and if you can answer yes, do you think that MOST people in this country could answer ‘yes’ as you did?
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