Anatole Kaletsky: I was wrong to be bearish on stocks
There are “three clear reasons” for equity markets to keep climbing, says Anatole Kaletsky, chief economist at Gavekal.
“I was wrong to turn bearish,” says Anatole Kaletsky, the self-proclaimed “perma-bull” commentator who became unusually downbeat when the Covid-19 crisis hit. In March, as the sell-off in most assets reached the bottom, he argued that it was “too early to buy equities”. And just a couple of months ago, he was dismissing the rapid rally as “market madness” driven by a flood of bored gamblers who had turned to stocks when they couldn’t bet on sports during lockdown. But more recently his optimism has been restored: there are now “three clear reasons” why “equity markets are more likely to continue moving higher than to retest their lows, even if the world is hit by another wave of Covid”.
One is that “the scale and speed of fiscal stimulus and monetary expansion … turned out to be far larger than I ever imagined politically possible”. This has averted “economic disaster”. Second, while these policies are not guaranteed to return the world economy to normality within two years (although the odds they do are fairly good), for now investors seem to have “100% conviction” that they will. That belief can’t really be proved wrong for at least a year or so. But most importantly, there’s good reason to hope that this crisis will produce a “structurally stronger world economy” in the coming decade, rather than the weak growth and high unemployment that many fear. Governments have now “enthusiastically embraced” Keynesian economic policies; if this persists, it will drive “a boom in long-term investment”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Could your family be at risk of an unexpected tax bill? How to keep your loved ones in the loop
Many families are out of the loop when it comes to planning the financial aspects of both retirement and inheritance
-
Rightmove: Glut of homes for sale in southern England drives asking price drop
Asking prices are 0.1% lower than a year ago, according to the property website, driven by challenges in affordability-stretched London and the south
-
Small UK industrial stocks are hidden gems
Opinion Ed Wielechowski of the Odyssean Investment Trust highlights three of his favourite British small-cap industrial stocks
-
Aurora Innovation is running on empty – is it overvalued?
Aurora Innovation, a maker of self-driving trucks, may have promised far more than it can deliver
-
'Ride the recovery in emerging markets': Gustavo Medeiros of Ashmore Group tells MoneyWeek
Interview What's the outlook for emerging markets? Gustavo Medeiros, head of research at Ashmore Group, gives his analysis and reviews progress in developing economies
-
What is the Enterprise Investment Scheme and should you have one?
The Enterprise Investment Scheme is tax-efficient and potentially lucrative. Taking a chance on the scheme could trim your family’s IHT bill, says David Prosser
-
The alcohol industry is suffering as consumers sober up – is it still worth investing in the sector?
Changing consumer tastes are rocking the alcohol industry, but the best players are adapting their strategies. Buy them while their shares are still cheap
-
A strange calm in credit
Corporate bond markets remain remarkably relaxed, with yields that offer little compensation for risks
-
'The City's big bet on green finance fails to pay out'
Opinion Insurers and banks are backing away from “green finance”, and there is not much sign of the green boom we were promised. That’s a problem for the City
-
Why is English football thriving – and can it last?
What has gone so right for English football? The national team has found its feet; the Premier League is swimming in money and profits are soaring