- Mark Mobius said the recent selloff in stocks could be a warning sign of what’s to come for the economy.
- The billionaire investor flagged the risk of recession in an interview with The Economic Times.
- Mobius said now is a good time for investors to keep around 20% of their portfolio in cash.
of stock market Steep sales According to billionaire investor Mark Mobius, this week was not an outlier, and the recent pullback could be a signal that the economy still has trouble.
The Mobius Capital Partners CEO pointed to a fall in global stocks on Monday, with the S&P 500 posting its worst single-day loss in two years. The Bank of Japan hiked interest ratesIt triggers selling pressure among investors.
Some commentators have argued that the sale is a Healthy resilience In US stocks, how high valuations climbed. Nevertheless, Mobius said, this failure may have been due to deeper problems in the economic and political situation Economic Times In an interview on Thursday.
„It’s not technical in nature,” Mobius said of Monday’s selloff, pointing to rising geopolitical tensions around the world and the upcoming U.S. presidential election. „All of this together creates a great deal of uncertainty. Then the situation in Japan caused a chain reaction, and of course, the US market came down.”
Stocks could be more negative on the way, Mobius suggested. The carry trade that emerged as the culprit of this week’s sell-off — he predicted there was more room to run — echoed other Wall Street strategists.
Meanwhile, the economy appears likely to have „further problems going forward.” Depression fears The job market rose this week after a weaker-than-expected fall in July.
Warnings of an economic slowdown are also in the money supply, which the central bank has cut „dramatically” over the past few years as it tries to curb inflation, Mobius added.
„We are now feeling the effects of this reduction. If you look at the money supply growth in the US, it is very low right now,” he said. „That means there’s not going to be as much money going into the market or the business or the economy. So, it’s a real problem and a long-term problem. We have more problems in America that will affect the world if we don’t increase the money supply much more than it is now.”
For investors, Mobius said, this could be a good time to set aside more cash. He added that disruptions in the stock market are usually signaled „before we see the real economic effects”.
„I think it’s good to have 20% of your portfolio in cash, maybe a little more because there will be opportunities down the road and it’s good to have some dry powder, let’s put it that way,” he said.
Stocks have stabilized this week after Monday’s deep loss, and sentiment on Wall Street is still generally optimistic, given solid economic growth and ambitious expectations for Fed rate cuts.
A full-blown bear market is unlikely, Bank of America said, as the market has not flashed technical signals suggesting a peak in stock prices.
„Oddany rozwiązywacz problemów. Przyjazny hipsterom praktykant bekonu. Miłośnik kawy. Nieuleczalny introwertyk. Student.