Francois Savary, chief investment officer at Switzerland's Prime Partner, said it was difficult to make short-term calls on the global economy. Rather than chasing rallies, investors should look to the flexibility provided by cash and invest strategically in stocks to hedge against inflation, he said.

Francois Savary is chief investment officer of Swiss asset manager Prime Partners. Savary said it was hugely difficult to have clear economic visibility due to the particulars of the current investment cycle. The key issue looming is how much analysts will revise their third-quarter earnings forecasts, he said.

Savary says investors should "absolutely not" be chasing the rally in equities that has been underway since mid-July. The S&P 500 is up almost 13% from its July lows, closing at 4,140 on Monday. On bonds, Savary said, "we all know it's very difficult to make money on the bonds side"

The U.S. 10 Year Treasury yield has slipped to trade around 2.76% on Tuesday after topping 3.48% in mid-June. Investors in global markets are navigating a whirlwind of inflationary pressures, recession risks and central bank tightening cycles. Even juggernauts such as Berkshire Hathaway and SoftBank posted investment losses in the June quarter.

Keeping some investment in stocks will provide partial protection from inflation, he said. Investors will need to be tactical and observe the latest economic figures. "We could have a recession, but you could also get a slow but satisfactory rate of growth in the coming 12 months," Savary said.
Posted by
Tap to Copy the Short Url to This Post: 
One-Stop Business News backed by Mark Cuban. Free to Use →