Hedge fund manager Dan Niles, in a note cited by Yahoo Finance this week, warned clients in February that he was becoming increasingly concerned that investors were not ready for the impact that the spread of the coronavirus might have in the United States. economy.
Niles therefore positioned his portfolio accordingly. Good thing. While the Dow Jones Industrial Average
posted its worst first quarter in its history, its Satori Fund closed in positive territory.
“If you go back and look at the story, there have been nine times the market has sold around 30% since the 1920s, so that’s pretty normal,” he said this week. “You get one every 10 years or so and if you look at each of them, you still get those bear market rallies. “
Niles told Yahoo Finance that he sees another significant drop from here, pointing to valuations that still hover well above historical standards, even after the painful setback.
“To reach the average, the market would have to drop 30%,” he said. “It is very easy to understand that the market is probably going down 30% before we are even close to a fair valuation. “
So no background yet?
“I kind of laugh when I hear people talking about a V-shaped recovery because we’re going to have at least 10% unemployment, I guess it’s closer to 20% before all of that is said and done, ”said Niles. “You are not going to recover quickly with so many unemployed people and we are not just talking in the United States. We speak all over the world, there are problems that occur. “
Niles explained that he was still increasing his short positions, but that he was going as long in areas he believed to be resistant to the next batch. He said he was increasing his stakes in Activision
Discover the full interview:
Bulls gained the upper hand during Thursday’s session with the Dow, S&P
and technology-intensive Nasdaq
all are gaining ground in the afternoon trades.
Also read:Prepare for the “deepest recession ever,” says BofA analysts