Here's another mishap, marking the commencement of a series of incidents.
Stefan Risse, a renowned fund manager at ACATIS and a student of the legendary trader André Kostolany, has warned of a significant stock market correction in the next two years. Risse's caution is rooted in concerns about excessive market valuations, potential economic imbalances, and the likelihood of tightening monetary policies that could stress financial markets.
According to Risse, the MSCI World ETF, with its high concentration of US stocks and highly valued tech titles, carries a significant risk of a market-wide correction. This prediction echoes Kostolany's emphasis on market psychology and cycles.
In anticipation of this market turbulence, Risse advises investors to focus on segments of the market with strong fundamentals and resilience. These typically include sectors with stable and predictable earnings, the possibility of dividends, and less sensitivity to economic cycles (defensive sectors). He also emphasises the importance of investing in high-quality companies with solid balance sheets.
Risse believes that value stocks and companies with tangible assets offer safer havens compared to highly speculative growth stocks or overvalued tech segments. By maintaining exposure to businesses that can endure economic stress and generate cash flow even in adverse environments, investors can weather the expected market storm.
ACATIS, following Risse's strategy, is currently buying favourable stocks in anticipation of a sell-off. However, the specific segment investors should focus on now remains undisclosed.
Risse predicts that the market correction will last longer than usual, and he is concerned that many investors believe a small drop in the market will be quickly bought back. Despite these concerns, he also points to segments with favourable valuations, suggesting that there are still opportunities in the market.
In a phase where the winners can't keep rising, and there will be a correction and sideways movement for several years at a lower level without new highs, Risse's cautious approach to investing could prove invaluable. As we move towards this predicted phase, staying informed and adopting a defensive, fundamentally sound investment strategy could help investors navigate the market turbulence.
In line with Risse's predictions, investors should consider focusing on stocks with strong fundamentals and resilience, particularly those in defensive sectors, to weather a potential market correction. Additionally, Risse advocates investing in value stocks and companies with tangible assets, as they offer safer havens compared to overvalued tech segments during economic stress.
