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.
-
‘My estate faces a £214,000 tax bill unless I get married’ - the perils of the inheritance tax pension reformsThe chancellor's plans to charge inheritance tax on unused pension wealth could be bad news for cohabiting couples
-
Investec enters cash ISA market with top rate for saversThe bank and wealth management group's new fixed-rate deal is one of the best on the market.
-
Albert Einstein's first violin sells for £860,000 at auctionAlbert Einstein left his first violin behind as he escaped Nazi Germany. Last week, it became the most expensive instrument not owned by a concert violinist
-
Who is Rob Granieri, the mysterious billionaire leader of Jane Street?Profits at Jane Street have exploded, throwing billionaire Rob Granieri into the limelight. But it’s not just the firm’s success that is prompting scrutiny
-
Emerging markets boast top-quality growth stocks at bargain pricesOpinion Lim Wen Loong, investment director at Ashoka WhiteOak Capital, selects three growth stocks where he’d put his money
-
Beware the bubble in bitcoin treasury companiesBitcoin treasury companies are no longer coining it. Short this one, says Matthew Partridge
-
Klarna leads a financial revolution – should investors buy?Klarna has ambitions to rewire the global payments system and has huge growth potential
-
New faces don’t solve old problems – why strategy also matters when it comes to investment trustsOpinion Changing managers often fails to boost a trust’s performance, says Max King
-
How to profit from silver’s record riseSilver often lets investors down, but there may now be room for further gains, says Dominic Frisby
-
Are venture-capital trusts worth investing in?Venture-capital trusts are a tax-efficient way to invest in early-stage companies. But are they worth the risk?
