Date
24 July 2017
George Soros is among the high-profile figures who have sounded caution over the outlook for global equity markets. Photo: Bloomberg
George Soros is among the high-profile figures who have sounded caution over the outlook for global equity markets. Photo: Bloomberg

Why we shouldn’t ignore the warnings of some star investors

Renowned short-seller George Soros is reported to have returned to trading after a long hiatus, aiming to profit from what he believes are coming economic troubles.

The move is not surprising as the hedge-fund mogul has been making bearish comments on the global economy over the past few months.

Meanwhile, billionaire trader Carl Icahn has recently sold all his Apple shares and kept a net short stock position of about 150 percent.

In other news, hedge-fund manager Stanley Druckenmiller, a former partner of Soros, told a conference recently that he is wary about equity markets’ prospects but is bullish on gold.

With the three heavyweights all seem poised to aggressively sell the stock markets, it could be harbinger of major trouble on the horizon.

While investors don’t need to take their words too seriously as the big speculators always adjust their views quickly when needed, some caution would however be appropriate, given the weak US corporate earnings.

US company earnings have been declining in recent quarters, but the S&P 500 index has moved close to a historical high.

Given the rich valuations, investors may do well by cutting back on their stock holdings and be prepared for potential shocks.

Buying some S&P 500 ETF put options is also a workable defense strategy.

This article appeared in the Hong Kong Economic Journal on June 13.

Translation by Raymond Tsoi

[Chinese version 中文版]

– Contact us at [email protected]

RC

Columnist at the Hong Kong Economic Journal

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