The 65 years old owner and president of Zulauf Asset Management, Felix Zulauf just shared at the Barron’s Art of Successful Investing conference that he see a stock market shock in 2016. Despite his optimism in the short-term, especially for internet firms such as: Facebook, Alphabet Inc (NASDAQ:GOOGL), (which by the way increased 9%+ in after-hours trading last night after reporting better than expected earnings) and Amazon, he sees a huge correction next year.
Felix Zulauf thinks that its possible for the S&P 500 (INDEXSP:.INX) to make a new high later this year or early this year, but this is not the beginning of nothing good. He thinks that this will be the end of the bull market and the beginning of a new cyclical bear market. He is bearish stock markets worldwide in 2016. He thinks that the S&P 500 (INDEXSP:.INX) could easily decline back to 1600.
A few of the reasons for expecting a bear market is monetary policy tightening by the central banks. Here he probably refers to the FED as the most important money manager, as the ECB it seems is even going to easy. The SNB mentioned a possible easing and BOJ is still easing and doesn’t plan to stop its program. We are also in a deflationary environment now. He is also worried that China’s slowdown will force it to devalue its currency and he thinks that this means a stronger USD and more problems for worldwide exports. He sees a 10-20% appreciation of the USD. Next year holding a long-term US bonds might be a good bet, Felix said.
Zulauf Asset Management is a Switzerland-based hedge fund, which he founded in 1990.
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