In today’s episode, Marcelo López spoke to Bill Fleckenstein, an investment manager with over 30 years of experience in the financial market. Bill shares his comments, market insights and investment ideas on the website fleckensteincapital.com.br.
Bill begins by discussing the magnitude of the attack on Saudi Arabia may have on markets depending on the actions taken in response to the incident and ponders about risk premiums and how agents have reacted to geopolitical tensions recently.
Fleckenstein then talks about the possibility that we are experiencing a bubble in the financial markets and the role that central banks, trading algorithms and passive investment vehicles play in this context, all from a historical and economic perspective, elucidating situations of distortion in asset prices.
On the possibility of a crash, Bill comments on Fed interventions, the impact of monetary policy on the market and what may be the catalyst for a strong correction, as well as aspects of the current scenario that are unprecedented in history and thus create more uncertainties.
Now is a good time to be shorting stocks? Fleckenstein, who has been very successful in the past with a short only fund, explains his point of view about being short at the moment and justifies, based on his perceptions of current market conditions, the valuations and prices observed.
Bill also talks about investing in gold and other precious metals, as well as gold mining, in contrast to other asset classes such as bonds and currencies, considering all the factors hitherto exposed.
As for the US-China trade war, Fleckenstein discusses his views on the issue and his expectations of a resolution for the problem. He also talks about the way Trump and next year’s US elections might impact those obstacles.
Bill concludes with an analysis of risks that are not being properly priced by the market.