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May 05, 2012 at 07:50 PM
“We’re not paying attention,” John Mauldin, president of Millennium Wave Investments, said of investors during a Strategic Investment post-conference interview with AdvisorOne on Friday. “As humans, we tend to project current trends out into the future, which is a dangerous and destructive thing to do.”
In the folksy style that is his trademark, Mauldin likened the current investor mindset to the person who jumps off the top of the Empire State Building and at the 72nd floor thinks all is going well.
“This conference tells us uncertainty in the market is real, and it’s imperative for investors to look for strategies that thrive in uncertainty and money managers that have the tools to adopt to a potentially rapidly changing environment,” added Jon Sundt, president and CEO of the alternative investment firm Altegris, a co-sponsor of the conference with Milennium Wave.
Sundt said he has a long allocation to equities currently, but his key is diversification.
“If I’m wrong about interest rates and my equity allocations, then my beta plays will lose money,” Sundt said. “It’s a stock picker’s market, and as a result our long/short equity performance is strong.”
As to what else Sundt likes in the alternative investment space, he notes that managed futures and global macro allocations have struggled recently, but it was to be expected given what they are designed to do.
“Bernanke has said he will hold interest rates low, so I don’t see how traditional fixed income could possibly be a good play,” he added, referring to Fedreal Reserve chairman Ben Bernanke.
Playing off of Sundt’s comments, Mauldin (left) said we live in a “binary world,” one in which the debt and deficit are dealt with, or they are not, but “all other decisions are derived from that.”
