Top investment thinkers look to the future
Despite sharing an overall view that we are in the midst of an economic recovery, three funds management chiefs have different ideas on the economic outlook.
Speaking at the PortfolioConstruction conference, Magellan Financial Group managing director and chief executive Hamish Douglass said he believes there will be a very long period of growth.
He said the global recovery would be followed by a very prolonged period of “anaemic” economic growth.
Douglass firmly believes the consumer is going to deleverage over the next 10 years.
“When they deleverage we’re going to have much lower levels of economic growth,” he said.
“The potential effect of the deleveraging on the consumer is frightening,” Douglas warned.
He went as far as predicting that global economic growth over the next decade is going to be 3 per cent to 4 per cent below the economic growth experienced over the last 15 years.
Meanwhile, Longview Economics chief Chris Watling’s idea on what the shape of the economy would take was not a positive one.
He said although companies are now “cash flow positive”, we should expect a second recession.
“I’m afraid I think we’re going into the ‘W’, by which I mean a second recession in two or three years’ time.”
HFA Asset Management chief investment strategist Jonathan Pain said we face an era of credit contraction.
There will be a long drawn out deleveraging process that will take years, if not decades.
“This is not a wham, bam, thank you ma’am [recovery],” Pain advised.
Despite the lengthy process, Pain said "we are currently living through the adjustment we simply have to have".
According to Pain, we should embrace the new socio-economic model [and] reject the old Anglo-Saxon American model.
“We should look forward to a fusion between east and west and [for] Australia to be right in the middle,” Pain said.
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