Rich Bernstein Says Investors Would be Foolish to Ignore These Signs

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Famous investor Rich Bernstein believes that investors would be foolish to ignore these key market signs.

Famous investor Rich Bernstein believes that investors would be foolish to ignore these key market signs, according to CNBC.

Bernstein is the CEO and CIO of Richard Bernstein Advisors. For starters, Bernstein believes the market recovery will be jagged. “Your portfolio has to be a little positioned in terms of matter and anti-matter.” He believes that ignoring the positives and negatives of the market is foolish. He has recommended a "barbell" approach to clients.

“Portfolios have to be balanced between the optimism that’s associated with this historic monetary and fiscal stimulus while combined with the budding pessimism of Covid-19,” Bernstein said. His investment strategy focuses on investments in consumer staples and health care for safety while maintaining exposure in energy and materials.

Berstein has also been watching the price of the dollar decreasing, which is currently trading around two-year lows. The US currency has fallen 6 percent over the past 3 months. He sees this as a threat to the markets because low inflation and a strong dollar are key metrics for bull markets.

“A prolonged period of dollar weakness would bring that all into question, and certainly shift the leadership within the market to something much more pro-inflation oriented,” he said. “It would certainly upset a lot of investors, and make their previous portfolios probably wrong for that new environment if the dollar were to continue to weaken.” Bernstein sees gold as a safe bet. The precious metal comprises about 8 percent of his firm's multi-asset portfolios

“People think of gold as being a hedge against things like inflation ... Gold historically has been a very good hedge against uncertainty,” he added. “Now, it’s got a little momentum tag to it.”

Gold hit an all-time high of $1,941.90 on a nominal basis. However, when adjusted for inflation, it was far below the record of $2,919.36 reached in January 1980.

“It’s still worthwhile to have in a portfolio,” Bernstein said. “The only thing that we know is certain over the next several year is that there’s going to be more uncertainty.”

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