Advertisement
Canada markets open in 8 hours 32 minutes
  • S&P/TSX

    21,837.18
    -12.02 (-0.06%)
     
  • S&P 500

    5,149.42
    +32.33 (+0.63%)
     
  • DOW

    38,790.43
    +75.63 (+0.20%)
     
  • CAD/USD

    0.7380
    -0.0009 (-0.12%)
     
  • CRUDE OIL

    82.58
    -0.14 (-0.17%)
     
  • Bitcoin CAD

    88,703.51
    -3,908.57 (-4.22%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,163.50
    -0.80 (-0.04%)
     
  • RUSSELL 2000

    2,024.74
    -14.58 (-0.72%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • NASDAQ futures

    18,183.75
    -47.75 (-0.26%)
     
  • VOLATILITY

    14.33
    -0.08 (-0.56%)
     
  • FTSE

    7,722.55
    -4.87 (-0.06%)
     
  • NIKKEI 225

    39,768.34
    +27.94 (+0.07%)
     
  • CAD/EUR

    0.6787
    -0.0005 (-0.07%)
     

Investors are 'due for a very big wake-up call': top money manager

Investors have seemed to forget about equities risk in September. But not one influential, veteran money manager.

“I think the markets independent of the [presidential] elections frankly are due for a very big wake-up call,” Ariel Investments Chief Investment Officer Rupal Bhansali said on Yahoo Finance’s On the Move. Bhansali has $7 billion under management at Ariel Investments and is the author of the new book ‘Non-Consensus Investing.’

Bhansali added, “I will tell you that in 2007 having been through markets and covering 50 countries, this playbook has been with us before. If you care to look back in history, Japan tried quantitative easing and it failed. Ultimately it’s about corporate earnings and balance sheets. Ultimately investors need to wean themselves off steroids.”

The stock market could experience a major setback this year, Bhansali thinks, adding that investors need to pay more attention to the recently soaring costs in the repo markets and sub-2% 10-year Treasury yield.

The unexpected

“People are not expecting it which is exactly why it could happen. The real disappointment is not going to come from earnings that everyone keeps watching, it’s about balance sheet risk,” said Bhansali.

ARCHIV: In this Aug. 4, 2011 photo, a trader works on the floor of the New York Stock Exchange. Wenige Tage nach der Loesung des Schuldenstreits in den USA hat die Ratingagentur Standard & Poor's dem Land einen Schlag versetzt: Sie senkte die Bewertung der US-Kreditwuerdigkeit am Freitag (05.08.11) von "AAA" auf "AA+" und entzog dem Land damit erstmals in der Geschichte die Bestnote. (zu dapd-Text) Foto: Jin Lee/AP/dapd
Photo: Jin Lee/AP/dapd

To Bhansali’s point, investors, perhaps, have gotten too high on the hog this month. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite are all up almost 3% in September, despite no good news on the U.S.-China trade war front. High beta, momentum tech stocks such as Facebook (FB) and Alphabet (GOOG) have led the markets higher.

ADVERTISEMENT

Meanwhile, the CBOE Volatility Index (VIX) — aka Wall Street’s fear gauge — is hovering around the lows of the year.

So, given that complacency, it’s not far-fetched investors could be badly caught off guard in the fourth quarter. Sometimes it pays — handsomely — to be a contrarian investor like Bhansali.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.