"Buy The Dip"? Europe's Biggest Asset Manager Says No, "Let Dust Settle"

The last few days have seen an unprecedented spike in news reports on whether it is time to "buy the dip" or not.

h/t @DaniBurgr

But while CNBC "Markets In Turmoil" special was all-in promoting this as nothing but a "health pullback" and lone-wolf volatility event, Europe's largest asset manager is less optimistic.

Raphael Sobotka, who helps manage 45 billion euros ($56 billion) in invested assets at Amundi, warns that while the latest pullback should wipe off some of the recent exuberance in equity markets, investors need to let the dust settle first on this "volatility shock."

As Bloomberg reports, Sobotka, who heads the flexible, risk premia & retirement solutions unit at Amundi, said in an interview.

“Tactically, we had been reducing our exposure to equities since December, and we further sold stocks over the past week,”

The equity exposure of our flagship fund, Amundi Patrimoine, is now 26 percent, down from 35 percent at the market peak in late January, and 40 percent at the end of last year.”

U.S. stock valuations have fallen back, Sobotka said, but...

"...the market isn’t cheap yet, and given that rates will continue to rise, the pressure on equity valuation ratios can continue to increase from here.”

So far, US equities retraced around 50% of the losses before crashing yesterday...

Comments

gmak Fri, 02/09/2018 - 04:54 Permalink

Don't buy the dip.Let all that big money put on their positions first and then you come in and chase price so that they can exit before the next dump. rinse and repeat. why would the largest asset manager tell everyone what he is going to do?

P.K.Snosage Fri, 02/09/2018 - 05:12 Permalink

Given that many features of the global economy are totally unprecedented: size of QE, low level of interest rates, high level of debt in most economies, size of China in world economy, role of technology in suppressing wages and inflation, the Amazon effect, etc; the truth is that is nobody really knows anything.

However, that will not stop all of these jokers confusing luck for skill and seeking to be the big one that timed the turn in the market. Their licence, of course, being their ability to get some suckers to give them their money to "manage" and the fact that the media (Bloomberg) love to find a hero. "It was that Gundlach, honestly, he predicted it."

Actually, there were plenty of other people who came out before Gundlach and suggested that people should fade the surge - on the simple basis that people had got carried away with themselves.

Basic neuroscience tells us that people do not like to loose money: so, yes, we can expect further volatility. But equally, the bandwagon effect tells us that when the snap back does come, most ordinary folk will still be phoning up their brokers telling them to sell.

new game Fri, 02/09/2018 - 05:38 Permalink

global money print. who can print the correct amount, outgame the other and not over print to excess inflation. i still believe the fed has let to many fiats out of the bag. granted it has been gamed by the chosen money disciples, but still there is that trickle or golden drip that is doing the job. plus excess cheap 10x'd loans that are fueling foolish investments. i see it everywhere in the twin cities. unrealistic growth with manipulated cost of money. bring it fwd baby, do it up in style now cause tuesday's burger is to be consumeD NOW!.