Janjuah thinks stocks aren’t cheap enough
Nomura’s Chief strategists says go for the barbell trade, gold and bonds. It has worked for David Rosenberg and it is a trade I recommended back in September 2009, so why not. The interesting bit is that Janjuah says that equities have been an “appalling investment” in real terms since the Internet bubble burst. Yet, he sees them as still overvalued.
My thesis has been that this is a
”fake recovery because the underlying systemic issues in the financial sector are being papered over through various mechanisms designed to surreptitiously recapitalize banks while monetary and fiscal stimulus induces a rebound before many banks’ inherent insolvency becomes a problem.”
That means economic policy becomes more important than ever in the investment world. And the degree of policy uncertainty only increases as bailout and deficit fatigue battle it out with liquidity uber alles and financial repression as the policy response of the day. Gold/Bonds has been a good play in that environment.
Will it continue to be? Bob Janjuah says it will.