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    Build cash positions ahead of extreme market movements, according to strategists

    People will dine outside the New York Stock Exchange (NYSE) in New York City on September 16, 2021. The Dow fell on Thursday as investors continued to have news of concerns from the Delta variant and a slight increase in unemployed complaints, despite rising retail sales.

    Spencer Pratt | Getty Images News | Getty Images

    According to Paul Gambles, co-founder of investment adviser MBMG Group, financial markets appear to be vulnerable to potential extreme movements in either direction.

    As a result, Gambles said investors should be on the sidelines and consider significantly increasing their cash positions.

    His comments are coming for market participants to remain cautious Given the surge in risk on the horizon.. These include fears of rising inflation, persistent concerns about the economic outlook during the ongoing coronavirus pandemic, supply shortages, and valuation concerns.

    Some investors are also wary of the possible impact of China’s debt-bearing real estate firm Evergrande. This is on the verge of default..

    Gambles told CNBC’s “Squawk Box Europe” on Friday.

    “I don’t know which way to go. That seems useless, but frankly, there are so many unanswered questions right now,” he continued. “Until we get those answers, our advice is actually something that could be a pretty big hit, and in some cases a bystander unless you can afford to receive a permanent hit. It’s better to sit in. “

    “It’s a coin toss”

    Gambling said the MBMG group, To tell With over $ 1.5 billion in assets being advised, it is trying to raise cash levels “quite dramatically” these days. Warning Market risk has “suddenly expanded and scaled” compared to just a month ago.

    He added that gold and gold miners are “one of the best ways to hedge risk” so far, suggesting that the Treasury is still worth some.

    “Take those benefits,” Gambling said. “If we reverse, we should be able to swallow the fear of missing rather than risking it, which can be a significant loss.”

    “We’re not saying that there’s an absolute crash far away from here. What we’re saying is a coin toss about whether things are good or bad. As you know, it has the potential to be quite extreme in either direction. “

    He said it was the first time he had advised clients to hold cash for some time.

    “This is a potentially crucial moment and I don’t know if it will be good or bad,” Gambles added.

    “Cash is garbage”

    Not everyone is in favor of building a cash position.

    Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, Said At CNBC’s Squawk Box earlier this week, investors shouldn’t hide in cash to deal with market risk.

    “Don’t keep it in cash,” Dario said at a SALT meeting in New York City. More than a year after saying “cash is garbage,” Dario said Wednesday that he still feels that way.

    Ray Dalio, a billionaire investor and founder of Bridgewater Associates, will pause during an interview with Bloomberg Television at the Grand Hyatt in Beijing, China, on Tuesday, February 27, 2018.

    Julia Marquis | Bloomberg via Getty Images

    Instead, hedge fund billionaires said the most important thing for retail investors was to know “how to diversify well.”

    Dalio argued that doing so across countries, currencies and asset classes is better than cash.

    Concerns about correction

    Daniel Lacalle, chief economist at Tressis Gestion, told CNBC on Friday that he expects financial markets to fall in October.

    “I think what we’re most likely to see is a reaction from very positive and very optimistic expectations for recovery at first,” said Lacare, who said the pace of recovery is now. He said it remained.

    Lacare said that overly bullish market forecasts are “embedded” in earnings and macro growth forecasts. In addition, tapering from the Federal Reserve Board of Governors and the European Central Bank, and concerns about China’s slowdown could cause market corrections.

    Given that the Federal Reserve Board and the ECB were expected to remain supportive, the risk of “very aggressive” modifications or spillovers to the sovereign debt market is somewhat limited, Lacare said. Stated.

    Build cash positions ahead of extreme market movements, according to strategists

    Source link Build cash positions ahead of extreme market movements, according to strategists

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