If you're putting money to work for the long-term, you might want to prepare for a rough ride.
Rob Arnott, the money manager who runs the $45 billion PIMCO All Asset and All Asset All Authority Funds, tells us a storm is coming – one he calls a financial ‘hurricane.’
“Deficits are higher that most people realize,” he says. “The debt burden is soaring as a consequence of that. And we’re asking our kids to pay it off." He sees these market influences as dark clouds swirling on the horizon and they could hit as early as next year, he says. And probably no later than 2015.
Considering the environment Arnott believes investors must prepare for inflation - terrible inflation. In fact, he believes it will be so serious that both the stock market and bond market will offer no havens.
"If we decide to deal with debt though inflation - reducing the real value of the debt by debasing our currency both stocks and bonds will crumble."
As a result he believes investors urgently need to diversify into emerging markets, high yield bonds and commodities. “Anything that can serve you well in a reflationary world because that world is likely coming in the next few years.”
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Trader disclosure: On March 14, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian is long AAPL; Najarian is long C calls; Najarian is long INTC; Najarian is long YHOO; Najarian is long JOYG calls; Najarian is long COP; Najarian is long PEP; Najarian is long HPQ; Najarian is long LULU calls; Finerman is long BAC; Finerman is long JPM; Finerman is long TGT; Finerman’s firm is long AAPL; Finerman’s firm is long JPM; Finerman’s firm is long WMT; Adami is long C; Adami is long GS; Adami is long INTC; Adami is long AGU; Adami is long NUE; Adami is long BTU
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CNBC.com with wires.