After a sharp sell-off, equity markets usually have a brief recovery before experiencing another bout of sustained selling. That’s according to Nader Naeimi of AMP Capital Investors Ltd.
Naeimi’s message to investors is to hold on to your cash just as he is hanging on to the bulk of his cash reserves in anticipation of another potential sell-off in March.
And he’s not alone. Warren Buffet is hanging on to a record $109 billion in cash.
Naeimi is the head of dynamic for AMP and oversees roughly $120 billion at the firm. He moved 30% of his assets to cash last year and is waiting for that second rout to happen before jumping back in to stocks.
“The plan is to buy in the second leg down, usually it’s best to wait for the markets to build a base before committing heavily back into the buy side,” Naeimi told Bloomberg. “As we go to the Fed meeting March 9, I think there will be more potential volatility weakness.”
While maintaining a cautious stance, Naeimi also said that he is “slowly, slowly” buying into weakness in emerging markets and is getting into some cyclical positions including in energy, financials, and Japanese equities.
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