Wall Street god-level trader and legendary fund manager Paul Tudor Jones said on Tuesday (3rd) that the current financial environment is difficult, and it is clear that holding bonds and stocks is not a good strategy, and investors should give priority to preserving capital.
The Federal Reserve will hold a two-day Federal Open Market Committee (FOMC) meeting on May 3, where it will raise interest rates to rein in soaring prices amid increasingly tight financial conditions, it is expected The Fed will raise interest rates by 2 yards and announce plans to shrink its balance sheet.
Wall Street is increasingly concerned that the Federal Reserve’s quantitative tightening (QT) policy will tip the still-pandemic economy into recession, preventing a soft landing for the economy.
Paul Tudor Jones, who rose to fame after predicting the October 1987 stock market crash, argued Tuesday that the Fed and investors are in uncharted territory that has never been seen before, and can’t think of a worse environment for risk assets than now. Now, obviously investors don’t want to own bonds and stocks.
Jones sees a situation unseen since the high-inflation period of the 1970s, with the Fed facing worsening inflation on the one hand and an economic slowdown on the other, and there will always be a conflict between the two.
In such a challenging environment, investors should prioritize capital preservation, Jones suggests.
Jones predicts: “There will be huge fluctuations in the financial market in the future, and inflation will be more difficult to control than imagined. If someone points a gun at my head and forces me to tell me a good investment strategy, I will say follow the trend (Trend Following) strategy, which is less popular right now, but will probably do well over the next five to 10 years.”