Lord Rothschild: “Share Prices Are at Unprecedented Levels, This Is Not a Time to Add Risk”
The comments above & below is an edited and abridged synopsis of an article by Tyler Durden
Last year, the financial world was abuzz when Bill Gross, then-manager of the world’s largest bond fund, had a dire prediction about how ‘all of this’ would end (not well).
Two months later, Lord Jacob Rothschild warned that central bankers were continuing what may be the greatest experiment in monetary policy in the history of the world. “We are therefore in uncharted waters, and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale.”
He said that the geopolitical situation in the UK had deteriorated, that the situation in China remained opaque, and that the slowing of economic growth would lead to problems. Conflict in the Middle East would go on indefinitely, and we have already felt the consequences of this in terrorist attacks.
One year later, Lord Rothschild is back. In his latest letter to RIT Capital Partners investors, he released what is perhaps his gloomiest outlook ever (highlights in the Buzz).
Rothschild continued the shift away from US capital markets exposure announced last year, noting that “we have a particular interest in investments which will benefit from the impact of new technologies, and Far Eastern markets, influenced by the growing demand from Asian consumers.” What is surprising is how aggressively Rothschild has cut its allocation to US-denominated assets in just the past 6 months.