For Barton Biggs, there's a good, a bad, and an ugly part of the current market environment. This 50 year veteran of Wall Street has told his grandchildren to seek their fortunes in other ways - even though he still personally thinks "the investment business is a great game" and has no intention to retire.
The good news is things could be worse. Biggs, the founder of hedge fund Traxis Partners and former Morgan Stanley global strategist says in the attached video, the era of range bound volatility has been "a little easier" to navigate than the financial meltdown of 2008.
But the bad news is investors now face continuously agonizing tests of their convictions. The heightened volatility requires ongoing "market judgments" that must be made correctly for fund managers to outperform.
As for the ugly, he won't personally get involved in the "craziness" of leveraged and inverse ETFs. He's convinced they are the culprits creating the volatility that's turning off investors. He calls this "very, very bad for the future of equities in America."
As of Wednesday, Biggs said he raised his net long position (or stock market exposure) to 72% from 40% in September. While most would consider that a fairly bullish stance, Biggs sees it as being a "cowardly lion" and worries that if markets continue to rise he'll "have to scramble to keep up."
One thing he's not worried about is the possibility the U.S. could soon get hit with another downgrade. "Credit (ratings) agencies are a joke," he says. Biggs, similar to a discussion we had on Breakout just this past Monday, says the markets don't care what S&P, Moody's, and Fitch do.
If you think that is blunt, wait until you hear him discuss the "maniacs and crazies" in the commodities markets, and an "extremely over valued Euro."
While any number of accolades and compliments have been bestowed upon this legend of finance, Biggs says of his 30 year run at Morgan Stanley: "We weren't geniuses. We were just in the right place at the right time."
- Barton Biggs