Kaminsky's Call: Observe Market Forces, and Act Accordingly
Morgan Stanley, Vice Chairman
I'm not a bull, and I'm not a bear. I've never sat in the value-style box, nor have I hidden behind the growth stock shield.
I respect technical analysis, but never bought a stock based on a chart. I believe in fundamental research, but recognize the market sometimes doesn't.
And most relevant to today's "K-Call", I survived twenty years managing billions at Neuberger Berman because I adhered to a simple game plan: Observe market forces, and act accordingly.
And that's today’s call-to-action.
Back in November and December 2009, it was obvious fund managers were terrified of missing the rally. Now the fear is more basic: losing money, and that has portfolio managers playing defense.
Doesn't matter if you're managing money markets, high-grade corporate bonds, or small cap value funds—everyone is petrified of losing money. That means we're in "meltdown" mode, and equity prices should continue to go lower until sentiment flips yet again.
Anyone looking for short-term bounces is flipping a coin. For now, most money managers will continue to raise cash on all rallies.
At Neuberger Berman, we never lost sight of the fact that most money managers distinguish themselves and add true value when the tape is tough.
We didn't put capital at risk by speculating on potential short-term plays. We weren't afraid to hold cash and play defensive.
So, when your broker asks you what type of investor you are, tell him you are a realist. There is a time and place for speculation. Now is not it. Act accordingly.
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Programming note: “The Strategy Session,” hosted by David Faber, begins Monday June 7 at Noon ET on CNBC.
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