Not all investors are created equal. Some just buy and hold, which may be OK in the long run, but it subjects you to 50% declines periodically. If those declines come just as you’re getting ready to retire and the market takes 10 years to recover, that’s not a great outcome.
Other investors are more like day traders. They usually lose money because emotion gets in the way of good trading and the commissions are high. Some investors try hard but underperform index funds because they miss out on the one or two big winners that account for most of the gains in an index.
Then there are a small number of active traders who really do beat the market and produce huge gains for their investors. Warren Buffett, Ray Dalio and Bruce Kovner all fall into this category. Another consistent winner who has made huge profits for a long period of time is Scott Minerd, the Chief Investment Officer of Guggenheim Partners.
Guggenheim is a family office, not a hedge fund, so Minerd is not as flashy and does not get as much publicity as some of his hedge fund peers. But, his long-term track record is just as good.
What is Minerd saying about the stock market today? According to this article, he’s expecting a 40% crash in stocks and massive debt defaults in the next recession. Minerd says stocks might continue to go up this year, but as the economy runs out of steam and as interest rates rise, a major crack-up is coming soon. That’s a dire warning from a very savvy investor.
I wouldn’t bet against it.
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