Trends Watch: November 17, 2016

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 to Steve Gerbel, Founder and President, Chicago Capital Management.

What is your outlook for the alternative investments?

We are of the opinion that the future for hedged alternative investments should improve in the coming months.  As the market has trended sideways, it seems that more and more funds have entered the alternative investment arena in search of any investment capable of producing a positive return.  This new inflow of capital has caused most investment returns and expectations to contract.  However, with an increase in interest rates on the horizon at the Federal Reserve Board Meeting in December, I am hopeful that in the months ahead that those new entrants will return to their more speculative investment styles that offer higher perceived returns.  This should allow profit margins across the board for the alternative investment universe to expand to levels more in line with what we have seen historically.

What is your outlook for the economy?

Our outlook for the economy is cautiously optimistic.  The economy has struggled mightily this year to meet economists’ projections.  It is our opinion, one of the biggest impediments holding this market back the last six months has been the uncertainty surrounding the U.S. presidential election.  With the election now behind us, we are strongly of the opinion that the election results should allow Wall Street executives to confidently formulate and begin to execute their strategic plans in the coming months.

What keeps you up at night?

The lack of recognition and willingness of both politicians and citizens to even address the reality that significant changes need to be made to our government’s entitlement programs.  Every day that politicians delay addressing these issues allows our entitlement shortfalls to grow.  All of our politicians are aware of these issues, yet none of our politicians have even shown enough courage to openly engage in discussions on this topic.