Weekend Reads for Global Investors: 2016 Wisdom from El-Erian and Gundlach

2015 turned out to be a fruitless year for fund managers. Judging from the first few weeks, 2016 may be no better. And potentially even worse.

Stock markets worldwide, as indicated by the MSCI World Index, returned nothing for all of 2015. Hedge funds also turned in their worst scorecard since 2011. It was a tough year. And not only for stocks — bonds and cash did not fare well either.

On the first trading day of 2016 and the first day that new circuit-breaker rules were put into effect in China, the stock market there went into a nosedive. Within a week, the rules were suspended, and the man behind the rules became China’s public enemy number one. No cushy retirement jobs on Beijing Financial Street, China’s equivalent of Wall Street, in sight for him, I guess. Markets in New York, London, and Tokyo also lost ground in the first few weeks of 2016.

Sentiment on the Street is awfully bearish and understandably so. And just in case you are thinking of taking a stab at picking the bottom, seasoned investor Jeffrey Gundlach came out warning against just that. I’d listen to him. “Do not try to catch a falling knife,” as they say.

And it’s not just stocks. I spoke with investors in Beijing this week and currency is what’s on everyone’s mind. Offshore renminbi (RMB) has had some wild swings, so much so that it caught the attention of another veteran investor, Mohamed El-Erian. I wrote about the potential of a global currency war breaking out in this column over the summer. The situation now looks just as serious, if not more so. Even more notably, oil just dropped below the 12-year low this week and is searching for a bottom.

“As January goes, so goes the year.” If you believe in the January barometer, as many market practitioners do, brace yourself for a wild ride in the coming year.

Below is a list of links from the paragraphs above as well as some of the other interesting reads I have come across in recent weeks. Happy reading and enjoy the weekend.

Markets

• All the market volatility last year turned out to be all for naught. In terms of corresponding returns, that is. “Hedge Funds Post Worst Year Since 2011” (CNBC)
• Will 2016 be different? “Analyst: Here Comes the Biggest Stock Market Crash in a Generation” (Fortune)
• In case you are tempted to try and pick the market bottom, at least read this sage advice and consider yourself warned: “Gundlach Warns Investors Not ‘To Be a Hero’ in This Wild Market” (MarketWatch)
• This report from Davos provides a good summary of what’s bothering market participants: “Here’s Why Global Markets Are Panicking Right Now” (Time)
• These are among the most bearish views that I have seen: “‘Sell Everything,’ Global Banking Giant Tells Investors and Brace for ‘Cataclysmic Year'” (Financial Post)
• “WTI Oil Settles at Nearly 13-Year Low Below $27 a Barrel” (MarketWatch)

Investing

• Old wisdom for the new year: “What Warren Buffett Isn’t Doing” (Huffington Post)
• This portfolio manager thinks miners are cheap: “Contrarian Investor: ‘I Am Buying Miners and Selling Housebuilders” (The Telegragh)
• “Should I Invest My Nest Egg Like Warren Buffett Recommends?” Should you? (CNNMoney)
• “Why Hedge Funds Are Sucking Wind” (Pragmatic Capitalism)

Emerging Markets

• Life is still tough out there in the emerging economies. “As Leaders Chill in Davos, Emerging Economies Going Downhill Fast” (Reuters)
• “The Man Behind China’s Circuit Breaker Gets Grilled” (Wall Street Journal)
• Mohamed El-Erian opines on RMB devaluation and much more: “The Perils of China’s Currency Devaluation” (The Guardian)
•  The Hong Kong Inter-Bank Offered Rate (HiBOR) made history, hitting record highs as the People’s Bank of China purchased offshore RMB. “China Opens New Front in War on Speculators” (Financial Times)

The Soft Side of Business

• “Eight Career Skills You Need to Be Competitive in 2016” (Fast Company)
• “6 Business Technology Trends for 2016” (The Next Web)
• “12 Mind Tricks That Make You Likable and Help You Get Ahead” (Inc.)
• “Why Attitude Is More Important Than IQ” (Forbes)

And Now for Some Readings Truly for the Weekend . . .

• “How to Spread Love in Your City in the New Year” (Lifehack)
• If things are not working out in the markets for you, maybe take a page from Rupert Murdoch’s book and try your hand at love? Anyways, we wanted to leave you with a heartwarming story to take your mind off the market turbulence. We tried. “Rupert Murdoch, the Greatest Romantic of Our Time” (Vanity Fair)

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©iStockphoto.com/Christian Mueller