There are a handful of investors who really make my ears perk up when they speak. Seth Klarman at hedge fund powerhouse Baupost is one of those investors. Obviously, Klarman is a reader of TPC, seeing as how negative he has become in recent weeks. In all seriousness though, the hedge fund legend is very negative. Speaking at yesterday’s annual CFA Institute conference Klarman said:
“I’m more worried about the world broadly than I’ve ever been in my whole career.”
Klarman believes the government stimulus has created an artificial environment which will ultimately result in massive inflation (Klarman obviously doesn’t read TPC). He owns puts on treasuries as protection. In addition, Baupost has 30% of its $22B fund in cash. In the near-term Klarman finds little value in the equity markets following the massive 15 month run we’ve seen. His long-term outlook for the market is equally pessimistic:
“Given the recent run-up, I’d be worried that we’ll have another 10 years of zero returns”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.