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Cannon Asset Managers CEO on how to position your portfolio for a depression
In 2006, little known economics professor Nouriel Roubini warned that the US housing market was at risk of collapsing. Fast forward two years and it did, triggering the global financial crisis. Roubini, now known is Dr Doom is forecasting another economic depression, contradicting the consensus view the recovery from Covid-19 will be V-shaped. Dr Adrian Saville, CEO of Cannon Asset Managers joins CNBC Africa for more.
Wed, 03 Jun 2020 15:41:13 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Importance of maintaining a balanced view amidst economic uncertainty
- Identification of key factors characterizing a potential economic depression
- Exploration of alternative investment avenues beyond traditional assets
Dr. Adrian Saville, CEO of Cannon Asset Managers, shared his insights on preparing investment portfolios for potentially tough economic times in a recent interview with CNBC Africa. With concerns of a looming economic depression in the aftermath of the COVID-19 pandemic, Saville offered a cautious perspective on the potential shape of the recovery and highlighted key strategies for protecting investments in such an environment.
In response to the debate between a V-shaped recovery and a more prolonged economic downturn akin to the Great Depression of the 1930s, Saville emphasized the importance of maintaining a balanced view amidst uncertainty. While acknowledging the potential for a slow or flatline recovery, he cautioned against being overly pessimistic, noting that economic downturns do not necessarily spell the end of the world, but rather signify challenging times ahead.
Drawing parallels to the economic landscape of the 1930s, Saville outlined the critical factors that could characterize a depression-type scenario: ultra-low interest rates, plummeting business performance, hypersensitive markets, rising unemployment, and sluggish economic growth. He underscored the need for investors to adopt a diversified and forward-thinking approach in navigating such challenging conditions, pointing out that traditional asset classes like equities and bonds may not offer attractive opportunities given the current market environment.
Saville elaborated on the potential investment avenues that could prove more promising in the midst of an economic depression, suggesting that a broader perspective and a spirit of adventure may be necessary to identify opportunities beyond conventional assets. With central banks deploying unprecedented stimulus measures to prop up economies, Saville echoed concerns raised by renowned economist Nouriel Roubini regarding the escalating levels of global debt. He highlighted the role of inflation in managing the sustainability of mounting debt, pointing out that rising inflation can help erode the real value of debt and make it more manageable.
While acknowledging the looming challenges posed by the significant debt burdens taken on by advanced economies, Saville emphasized the importance of considering the long-term implications and the arduous task of addressing the aftermath of the current crisis. As investors brace for a period of uncertainty and potential volatility in the markets, Saville's insights offer a strategic roadmap for positioning portfolios to weather the storm and seize opportunities in an evolving economic landscape.
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