The Long View
The Long View
Mar 23, 2020
Mohamed El-Erian: 'We Did Not Prepare for Something As Severe As What We’re Facing’
35 min

Our guest today is Dr. Mohamed El-Erian. Dr. El-Erian is Chief Economic Advisor at Allianz, the parent of PIMCO, where he formerly served as chief executive and co-chief investment officer, and President-Elect of Queens’ College, Cambridge University. He first joined PIMCO in 1999 and was a senior member of PIMCO’s portfolio management and investment strategy group. He rejoined the company at the end of 2007 after serving for two years as president and CEO of Harvard Management Company. 

Before coming to PIMCO, Dr. El-Erian was a managing director at Salomon Smith Barney/Citigroup in London and before that spent 15 years at the International Monetary Fund in Washington, D.C., where he served as Deputy Director. Dr. El-Erian has served on numerous boards and committees, including a stint as Chair of President Obama’s Global Development Council from Dec. 2012 to Jan. 2017. 

A much sought-after author, columnist, and speaker, Dr. El-Erian has published two best-selling and critically acclaimed books, When Markets Collide and The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse. He also was named to _Foreign Policy _magazine's list of “Top 100 Global Thinkers” four years in a row, among other accolades.

Dr. El-Erian holds a master’s degree and doctorate in economics from Oxford University and received his undergraduate degree from Cambridge University.

Background
Dr. Mohamed El-Erian bio
Dr. El-Erian’s commentary
Dr. El-Erian’s tv and radio interviews
The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse, by Mohamed El-Erian, January 2016. 
When Markets Collide, by Mohamed El-Erian, June 2008. 
• “The FP Top 100 Global Thinkers," Foreign Policy, Nov. 26, 2012. 
• Dr. El-Erian’s Twitter handle @elerianm  

Dr. El-Erian’s Recent Comments on COVID-19

• “The Coming Coronavirus Recession: And the Uncharted Territory Beyond," Foreign Affairs, Mar. 17, 2020. 

• “The Federal Reserve Takes its Crisis Management Game Up Several Notches,” Yahoo Finance, Mar. 17, 2020, 

• “It Will Get Better But After We Feel Even More Unsettled,” Yahoo Finance, Mar. 13, 2020. 

• “Six Things Investors Should Remember Amid Extreme Stock Market Volatility,” Yahoo Finance; Mar. 8, 2020. 

• “El-Erian: We Shouldn’t Bail Out Every Industry Halted by Coronavirus Crisis,” CNBC, Mar. 19, 2020. 

• “El-Erian: Fed Should Have Been More ‘Laser-Focused’ on Market Failures,” CNBC, Mar. 16, 2020. 

• “El-Erian on Markets: ‘It’s Getting Less Scary Than It Has Been for a While," CNBC, Mar. 13, 2020. 

• “El-Erian: U.S. Stock Market Could End Up Dropping 20%-30% Before Bottom Is Finally Reached," CNBC, Mar. 9, 2020.

Shownotes (Note: We will add the interview transcript soon.)

Introduction
• Introducing Dr. El-Erian and bio (0:21)

High Level Macro
• The market and economic backdrop have changed drastically in what seems like no time. You’ve been prescient in foreseeing some of the impacts. But what has surprised you thus far? (1:48)
• We’ve heard you say that financial “sudden stops” are more addressable than economic “sudden stops”. Can you explain the difference between financial/economic “sudden stops," why the latter is harder to deal with, and how that relates to our current situation? (2:58)

Policy Response
• Public health concerns are trumping economic realities at the moment. For instance, entire states are being told to shelter in place. This is economically devastating. Do you think this is prudent policy without a stimulus package or backstop of some kind? (5:13)
• You’ve argued that interest-rate cuts and broad fiscal stimulus shouldn’t be emphasized during this initial phase of the crisis. That we should instead focus on containment and building immunity to COVID-19. That seems surprising considering the scores of those who have been abruptly laid off or seen business dry up. What are they supposed to do without a massive, immediate stimulus? (7:02)
• Can we talk about the impacts that you foresee for the private and public sectors and what you view as the correct policy response for addressing each? Let’s take them one by one: (9:29)
- The suddenly unemployed
- The small business owner
- The lender
- The airline and hospitality sectors
- The state or municipality

Capital Markets
• Turning to capital markets, we’ve obviously seen stocks enter a steep sell-off. But the bond market has also broken down. Can you describe for some of our listeners--who might not be as familiar with the inner workings or dynamics of the bond market--what has happened there, why, and what will stem it? (11:29)
• The Fed stepped in to backstop money market funds in recent days. Have you seen signs that is succeeding in stabilizing corporate funding markets like the commercial paper market? (15:05)
• What will be point of equilibrium at which fiscal and monetary policy relief overtakes fear to stabilize markets and the economy? (16:57)

Aftermath
• You wrote that one of the lasting consequences of novel coronavirus will be accelerating deglobalization and deregionalization. Global supply-chain management and trade interconnection has been the dominant trend in recent decades. Why would we retreat from that, and how will that be felt in the real economy and daily life? (19:12)
• To this point, while COVID-19 has been deemed a global pandemic, its impacts have been mostly northern hemispheric. What do you think the implications of the virus spreading to the southern hemisphere over the balance of this year will be on trade, markets, etc.? (21:18)

Outlook
• About a week ago you said you expected the stock market to decline 30% from its highs. At that time it was down around 19%, and we’ve seen the market fall another 10 percentage points since then, putting it down almost 30% from the high. Have you revised your view or do you feel the sell-off has largely played itself out? (23:40)
• Most of our listeners are individual investors or advisors who diversify their assets widely across asset classes and styles, often using index funds and ETFs. Do you think this episode warrants a re-think of how they’ve approached asset allocation and investment selection? (27:03)

Closing
• Closing, disclosures, and outro (32:03)

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis or opinions or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)

Bogleheads On Investing Podcast
Bogleheads On Investing Podcast
bogleheads
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Dr. Cliff Asness is a Founder, Managing Principal, and Chief Investment Officer at AQR Capital Management, a quantitative money manager overseeing $186 billion in assets as of December 2019. Prior to co-founding AQR Capital Management, he was a Managing Director and Director of Quantitative Research for the Asset Management Division of Goldman, Sachs & Co. He is an award-winning researcher on quantitative investment strategies and has authored articles for many publications, including The Journal of Portfolio Management, Financial Analysts Journal, The Journal of Finance, and The Journal of Financial Economics. Cliff received a B.S. in economics from the Wharton School and a B.S. in engineering from the Moore School of Electrical Engineering at the University of Pennsylvania, graduating summa cum laude in both. He received an M.B.A. with high honors and a Ph.D. in finance from the University of Chicago, where he was Eugene Fama’s student and teaching assistant for two years. This podcast is hosted by Rick Ferri, CFA, a long-time Boglehead and investment adviser. The Bogleheads are a group of like-minded individual investors who follow the general investment and business beliefs of John C. Bogle, founder and former CEO of the Vanguard Group. It is a conflict-free community where individual investors reach out and provide education, assistance, and relevant information to other investors of all experience levels at no cost. The organization's free website is Bogleheads.org and the wiki site is Bogleheads® wiki. Bogleheads sites are operated by volunteers who contribute time and talent. Donations help defray operating costs. Since 2000, the Bogleheads' have held national conferences in major cities around the country and currently meet in Philadelphia in the autumn of each year. There are 56 Local Chapters in the US and three Foreign Chapters that also meet regularly. New Chapters are being added on a regular basis. This podcast is supported by the John C. Bogle Center for Financial Literacy, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012.
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WEALTHTRACK
WEALTHTRACK
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Can investing be simple? Can we stop worrying about what’s happening on Wall Street, in Washington, with Fed policy, inflation, corporate earnings, and numerous other headline-making concerns? Can we just get on with our lives and still invest successfully?  According to this week’s guest, the answer is yes, and we shouldn’t even care what the market is doing.   What should we care about? How should we invest? That is the focus of this week’s exclusive WEALTHTRACK interview.   Our guest is Charles Ellis, the author of the investment classic WINNING THE LOSER’S GAME, available now in its 2017 7th edition. Ellis is the author of 16 other books including the recently published 10th-anniversary edition of THE ELEMENTS OF INVESTING, co-written with his good friend, Princeton economics professor Burton Malkiel.    Ellis is a globally recognized financial thought leader, investment consultant, and advisor to governments, institutions, and endowments. He also cares deeply about helping investors succeed, as he puts it “winning the loser’s game.” He will help us do that this week.  WEALTHTRACK #1721 broadcast on November 20, 2020 More info: https://wealthtrack.com/timeless-strategies-for-successful-investing-from-legendary-investment-consultant-charles-ellis/ WINNING THE LOSER’S GAME (2017 edition): https://amzn.to/379ODOP THE ELEMENTS OF INVESTING: https://amzn.to/2UL96Dz --- Support this podcast: https://anchor.fm/wealthtrack/support
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Top Traders Unplugged
Niels Kaastrup-Larsen
115 The Systematic Investor Series ft Robert Carver – November 22nd, 2020
Rob Carver returns to the show today to discuss the relevance of open trade equity compared to closed trade equity, the reported return of value’s reign over growth stocks, combining Trend Following portfolios with other strategies, the important of using significant sample sizes when analysing data, why successful systematic traders tend to have the longest documented returns on record.  Questions we answer include: Which type of moving average is generally the most effective in Trend Following?  Do you recommend any hedging strategies? If you would like to leave us a voicemail to play on the show, you can do so here. Check out our Global Macro series here. Learn more about the Trend Barometer here. IT's TRUE 👀 - most CIO's read 50+ books each year - get your copy of the Ultimate Guide to the Best Investment Books ever written here. And you can get a free copy of my latest book "The Many Flavors of Trend Following" here. Send your questions to info@toptradersunplugged.com Follow Niels, Moritz & Rob on Twitter: @TopTradersLive,  @MoritzSeibert & @InvestingIdiocy And please share this episode with a like-minded friend and leave an honest rating & review on iTunes so more people can discover the podcast. Top Traders Unplugged wins award for ‘Best Trading Podcast’ and features among the ‘Top 20 Best Investing Podcasts in 2020’ by The Investors Podcast 🏆 Episode Summary 0:00 - Intro 2:35 - Macro recap from Niels 4:59 - Weekly review of returns 27:16 - Q1; Mervin: What investment strategies would you recommending supplementing a Trend Following portfolio with? 37:36 - Q2 & Q3; Daniel: How do you think about open trade equity versus closed equity, in terms of drawdowns?  Do you have any recommendations for hedging your Trend Following positions? 1:03:57 - Q4; Antonio: Which type of Moving Average (SMA, EMA, ALMA etc) is generally the most effective in Trend Following models? 1:22:48 - Performance recap 1:23:48 - Recommended podcast listening this week: Rauol Pal on the What Bitcoin Did Podcast & blog post on the Robot Wealth website regarding Tesla's inclusion in the S&P 500 & William White talking to Jim Grant on Real Vision Subscribe on:
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