Trends Watch: International Equities

November 12, 2020

By Elana Margulies-Snyderman 

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Steve Cucchiaro, President & CIO, 3EDGE Asset Management.

What is your outlook for alternative investments?

Our outlook for alternative investments is favorable. Many investors have enjoyed the returns from more traditional U.S. stocks and bond portfolios over the past decade.  However, our analysis suggests that both U.S. stocks and bonds are now overvalued and are highly unlikely to repeat their relative outperformance over the next ten years. Therefore, we believe there are better opportunities with alternatives to traditional U.S. stock and bond portfolios.

What are the greatest opportunities you see and why?

Given the backdrop of U.S. stock and bond overvaluation, our research suggests that international equities such as Asian equities and real assets like gold and commodities are relatively undervalued areas with the potential for long-term appreciation. Furthermore, a disciplined investment approach to tactically navigate the likely choppiness ahead may further enhance returns and limit downside risks.

What are the greatest challenges you face and why?

This year, markets have been manipulated by central bank and government interventions in a truly unprecedented manner. While interventions to date have been supportive in the short term, the unpredictability of future efforts in terms of size and, more importantly, timing makes navigating the road ahead more challenging.  While governments and central bankers debate the efforts that are needed, the markets gyrate up and down on hopes only to be disappointed by fears of no agreement.

What keeps you up at night?

There is a school of thought that we are largely over the coronavirus. However, recent projections from the Institute of Health Metrics and Evaluation (IHME) suggest a second wave of coronavirus in the northern hemisphere between now and February, a development that I believe is not currently reflected in investor expectations and market prices.

We have seen the beginnings of a resurgence in several European countries and corresponding restrictions being imposed to help combat further spread. There is good reason to believe the United States may experience something similar in the months to come, which is quite concerning and may be detrimental to further stock market appreciation.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper LLP.

 

About Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.