This week PIMCO, one of the globe’s biggest bond fund managers and member of the Allianz group of companies, released a manifesto on how to navigate a global investment outlook which is “stable but not secure”.
It was a long and involved piece on the risk facing the global economy and global markets.
But in the end PIMCO distilled its thinking into 6 easy to understand rules it, and other, investors can use over the next 3-5 years.
- 1. Be patient.
- 2. Be tactical and flexible.
- 3. Provide liquidity when others need it (that means buy during panics).
- 4. Prepare for market turning points. This is one of the key advantages of active management.
- 5. Avoid or underweight assets that solely or primarily rely on central banks to support valuations.
- 6. Hedge against a tail scenario in which inflation overshoots central bank targets. Although this is unlikely in the near term, the risk is significant over our secular horizon.
Rules to live by.
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