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For years now the markets have been in what participants called the ‘Goldilocks zone,” not to hot, not too cold, just right. Well, with increased volatility, and some worrisome inflation numbers, that may be changing. Riva Gold and Georgi Kantchev write that after nine years, Goldilocks conditions may be gone.
Nine years into a roaring stock bull market, fund managers are paying their last respects to Goldilocks.
Investors broadly remain bullish on stocks and other investments, aided by an upbeat U.S. jobs report on Friday. But repeated bouts of market volatility in 2018 and signs of a pickup in inflation have forced them for the first time in several years to reassess their tolerance for risk. For many, that means boosting cash positions, slashing equity or diversifying portfolios.
Take Zurich-based GAM Holding , which has $163 billion under management. During the height of February’s stock swoon, senior investors at a regular strategy pow-wow concluded a new regime for markets was taking shape, after nearly two years of steadily rising asset prices and low volatility spawned a not-too-hot, not-too-cool trading environment likened to the 19th-century fairy tale.
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Jeremy Jones, CFA
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