Hold Cash, Go With 'Boring' Stocks: Analyst
Uncertainty over sovereign debt and the volatility in world markets could mark a period of "2008 redux," and the best option for investors is to remain cautious with long-term assets and hold on to cash, Julian Pendock, a partner at Sendock Capital, told CNBC
"Holding cash is a bit like having a parachute when you jump out of a plane. If you don't have a parachute, you don't hold cash, you're not defensive, there's no parachute and you go into free fall," he said.
Pendock told CNBC he believes the latest period of uncertainty in global markets, exacerbated by doubts over European and US debt, is potentially worse than 2008 -- the year that Lehman Brothers' collapse set off a financial crisis -- because Western governments and their leaders had "blown it" and now lacked political and financial capital.
"The question investors have to ask themselves is: Is this like 2008? Some people say it's not, some people say it is, but you could argue that it's worse than 2008," Pendock explained.
"In 2008, Merkel and Obama and the political leaders were riding high, they had a lot of political capital… these big G20 meetings -- everyone expected something from them.
"They also had financial capital and they've blown both, so they're out of ideas, they're out of money and people have no comprehension of the level of spending cuts that will have to take place and the fiscal squeeze that it will generate. They've spent the last four years kicking the can up the road and they've run out of road," he added.
Pendock said that amid such uncertainty, Sendock Capital would continue to remain cautious and wait until "the dust settled" before buying more equities.
"There are a lot of stocks that we like but it's just a question of price, so when the dust settles and we're still being cautious and sitting on our hands, that means we can get them at a better price," he said.
However, Pendock said he believed certain companies would continue to do well, notably food giants Nestle and Unilever .
"You might say they're boring, but really they're not because Nestle's got a bullet-proof balance sheet, it's yielding almost 4 percent now. That's amazing, and it's a more risk-free asset than I would say German bunds are," Pendock said.