Bummer. Mike O’Rourke, the author of one of our favourite reads before bed — Bedtime With BTIG — is leaving the firm, and has penned his final note.
He’s going to an unnamed “premier global asset manager.”
For our interview with O’Rourke from last April, see here.
Here’s his final commentary for 2011:
The economic recovery should continue to gain momentum. Main Street will finally begin to catch up with the recovery that financial markets have been discounting. As such, we expect stocks to have a better than average year as the S&P 500 will likely post a record level of earnings. Investors may be disappointed because strong gains in the economy have already been partially discounted in Equity returns. We expect 2011 to be as close to a “normal” environment as markets have experienced in some time. The importance of Stock-picking will reemerge as macro themes fade to the background amidst the economic recovery. Investors should favour Developed Markets over Emerging Markets, because for the first time in years Developed Markets will finally have a positive story to tell. Emerging Markets will grapple with inflationary pressures. We still believe there are large pockets of institutional investors that are underweight Equities, and thus, will probably go through a re-risking process over the next 1-2 years. We expect this trend to mute the downside of corrective moves when they commence. We expect interest rates to gradually rise as the economy recovers, inflation will remain tame and we do not expect a QE3. We still expect 2011 to be a corrective year in the long-term bull market in Commodities.
As someone who was bearish and worried in 2007, we love the long term outlook going forward. A generational washout was necessary, and although the problems are far from solved, at least people are finally aware of them and steps are being taken to correct some of them. Regrettably, the largest risk in 2011 may very well be the Fed Chairman’s adamant stance on keeping an excessively easy monetary policy. Encouraging risk taking at 1300 on the S&P 500 is much different and potentially dangerous than doing so at 666. You want investors to invest on the merits of an investment, not the Fed Chairman’s pledge to keep policy too easy for too long. As noted, we do not expect a QE3, but if it happens, we will not be surprised if the market’s reaction is to sell rather than buy. An accommodative monetary policy is usually a positive, but if policy is not rooted in reality, investors will not want to play the game.
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