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What are MM’s plans post Xmas?

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Question asked 17/09/2022

What are MM’s plans post Xmas?

Hi Ask James/Shawn question I just read this via Bloomberg. They are quoting Ray Dalio. “It looks like interest rates will have to rise a lot (toward the higher end of the 4.5% to 6% range),” the billionaire founder of Bridgewater Associates LP wrote in a LinkedIn article dated Tuesday. “This will bring private sector credit growth down, which will bring private sector spending and, hence, the economy down with it.” A mere increase in rates to about 4.5% would lead to a nearly 20% plunge in equity prices, he added. What's your opinion and plan for beyond Christmas? Regards Nick

Answer

Hi Nick,

Obviously there are lots of moving parts to this question but I think I can summarise our current feelings fairly simply and they do have some overlap with Ray Dalio’s thoughts. At this stage of the cycle we are comfortable with our short-term view while the coming years could be tricky:

2023 is likely to be similar to this year, with plenty of volatility where buying weakness and selling strength will pay dividends, especially for those prepared to press the sell button when appropriate.
We anticipate a market recovery into Christmas but subscribers should expect us to migrate back down the risk curve in early 2023.

If we call the GFC & COVID “special events” it’s easy to argue that stocks have only wobbled for 1-year since bond yields turned higher after enjoying very strong appreciation since interest rates began falling way back in the the 1980’s hence we should be prepared for a few more volatile rather than trending years – great news for active investors like MM!

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LAST UPDATED 16/09/2022 15:14

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