Stanford Brown chief investment officer Ashley Owen has given a firm indication that the bull market’s end is on the horizon, telling clients that “pretty much every asset in the world is overpriced”.
Owen, who was appointed CIO at Stanford Brown in August 2016 and has held executive roles at Philo Capital Advisers, Citigroup, HSBC and ANZ, spoke to clients of the firm at an Investor Insight luncheon and outlined his reasons for dialling back investment in riskier assets.
“We don’t see another GFC in the same shape as 2008 occurring, but in a world where markets have run up so well on such good news, there is a very, very small room for error,” Owen explained.
Shares, bonds, properties and even some commodities are overpriced, Owen said, which has left little margin for growth and far more for a downturn. The firm’s change in sentiment was a rare one, as Stanford Brown made significant wholesale changes to portfolios only “once every five years or so”, he said.
“We sat back and asked ourselves what was driving the markets in the long term. We’re not day traders, we’re in this for 20, 30, 40 years,” he explained.
The decision was made to capitalise on a market that is still remarkably buoyant, despite the extended nature of its run.
“We’re not doing it when people are panicking,” he said. “We’re seeing record shares out of the US; Microsoft, Amazon and Facebook – these companies are doing very, very well at generating very good profits.”
The firm has chosen to “put in a position of gold and US dollars”, said Hamish Harvey, a principal and senior adviser at the firm, which some might consider an unusual choice.
Owen stated that the US dollar investment was a safe haven against the possibility of a global sell-off. While the USD generally retains its value, the Aussie dollar “always sells off in any global downturn, because it’s a high risk, hot-money currency”. When the Aussie dollar does fall, “the Aussie dollar/gold price always does well”.
“They’re only small positions,” he continued, “but they’re there as good alternatives to traditional defensive assets, which are very expensive.”
The time was right to begin taking risk off the table, Owen explained, even if it meant sacrificing what was left of the current market run.
“We’re not going to try to eke out the last, last, last legs of the boom,” he said. “Things are expensive right now, and there are better things with more upside and less downside than shares.”
