Bruce Stout, the owner of Murray International Trust, believes that the investors risk is getting burned as currently, the optimism is pretty high for the stocks. On the other hand, the bond yields are now at a low stage. The market results are actually proving him to be correct.
According to Stout, the higher prices go the more short term expectations way and it can actually distort things and then you will possibly be on the losing side. Stout believes that the stocks are in a capital preservation mode at this point of time and the main goal should be not to lose money.
The economy of Europe is expected to be out of recession already. Two Asian powerhouses India and China are experiencing a slowdown, whereas, the Central Banks of countries such as Japan and US are still printing money in an attempt to revive growth. Stout, under the current circumstances, is more pessimistic compared to some of the biggest investors all over the world.
On last week, Goldman Sachs stated that the stock market should rally for another 2 and half years at least. On the other hand, the Manager of Pacific Management Co., the biggest fixed income fund in the world, Bill Gross, on 10th May stated that a 30-yeat bull market in the bonds is probably going to come to an end. Gross increased the holdings of Treasuries in last month to the highest value since July, 2010.
According to Stout, the bond market is sort of rigged as it is pretty unnatural to have the worst economic fundamentals all the time, yet record low bond yields. In case of stock market, it’s obvious that people will be paying up for a possibility of growth, however, if too much is paid, investors will ultimately end up losing their cash.
Stout’s fund is capable of investing in any asset anywhere in the world. The fund’s stakes have been reduced by Stout in certain companies such as Novartis AG and Kimberly Clark de Mexico SAB, right in this year.
The closed end fund of Stout has risen around 125% since March, 2009, as far as the net asset value for each share is concerned. In the last 5 years, the returns of this fund ranks 1st of 10 comparable so called global growth and income funds.