Jeffrey Saut had worked for six months in 1971 on a trading desk in New York City before he mustered up the courage to ask his boss about the enormous red number four that hung boldly above his credenza.
His boss pushed his chair back from the trading desk and took a long drag of of his unfiltered Lucky Strike cigarette. “Kid, it’s the number of bear markets you’ll see in your lifetime — don’t ever forget it,” he said.
Saut, who currently serves as Chief Investment Strategist at Capital Wealth Planning, never did. Now, nearly 50 years later, he knows that his boss was right.
Today, the tables have turned, with Saut providing his own insights on the future of the global asset management industry during Nicsa’s 2019 General Membership Meeting in Boston.
According to Saut, we’re currently in a secular bull market. “I’ve been running with the bulls since October of 2008, which is when the majority of stocks bottomed,” he said. “What do we do now, in 2019? Well, the things that put us in the tank in 2008 (high oil prices, the housing bubble) — are not around today.”
Saut said people often cut secular bull markets prematurely short: “They stopped the 1949 to 1966 secular bull market in 1956, because that’s when Egypt tried to take over the Suez Canal, and the market took a 30-plus percent hit,” he said. “But the bull market went on.”
“They cut off the 1982 to 2000 secular bull market because of the crash,” he continued. “But the bull market went on for another 13 years.”
Saut predicts that the current secular bull market will go on for another five years, but the secular bull market in fixed income is over. He also said that interest rates will stay low – but won’t dip much lower. He added that business sentiment has returned, and consumer confidence is excellent.
“I don’t think we’re going into a recession — I’ve been hearing we’re going into a recession for three years … but I don’t see it,” he said.
Finally, Saut touched on the active vs. passive funds debate, which is measured by the Morningstar Active/Passive Barometer, explaining that outliers may be skewing the data.
“If you exclude the lowest-rated funds, and take the three top-rated funds, active outperforms in just about every sleeve, and nobody is telling that story,” he said.
Note: Although the observations contained in this work represent the best thoughts of the individuals comprising the NICSA panel, they do not necessarily reflect the views of NICSA or any of its member organizations. Matters addressed in this work may touch upon legal or regulatory matters, however nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.
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