If you want to make money in these markets, you want a fund manager with a few grey hairs. "This is no market for young men," says veteran investor Jeremy Grantham, 72.
As Grantham, chairman of US fund manager GMO, tells Marketwatch's Jonathan Burton: "At least us old men remember what a real bear market is like, and the young men haven't got a clue."
There are plenty of problems with the global economy, but the biggest threat is that if any one of them erupts into a crisis, it could ignite the rest.
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"We have these basically distinct problems joined only by a general fragility of the financial system. So you can't know for sure that if China stumbled it wouldn't set off something else, or if the US goes into a double-dip [recession], it won't set off a European bank failure."
Grantham points the finger at central bankers, politicians, and big banks, as he has done regularly both before and after the 2008 crash.
"No one has been prepared to make tough decisions. Where have the Europeans been for ten years? None of these things came out of the woodwork two weeks ago. No one attempted to blow the whistle and make tough decisions in a timely fashion."
As for the US, rising income inequality is a serious problem: "We have actually made the tax structure friendlier to the top 10%" in recent years, he says. And the Fed punishing savers in the hope of bailing out speculators and debtors is only making things worse. "You can't run the economy on BMWs alone - if the average person is in a pickle, how do you have a healthy economy?"
He favours building a portfolio of 'high-quality blue chips' from around the world with dividend-paying emerging market and Japanese stocks a particular favourite. However, he warns that stocks could get even cheaper from here, if any of the big problems facing the economy get worse.
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