Barton Biggs Says Recession Worries Make Equities Risky
Barton Biggs
Jin Lee/Bloomberg
Barton Biggs, co-founder and managing partner of Traxis Partners LP, speaks at the Bloomberg Link China Investment Strategies conference in New York, U.S., on Wednesday, Feb. 2, 2011.
Barton Biggs, co-founder and managing partner of Traxis Partners LP, speaks at the Bloomberg Link China Investment Strategies conference in New York, U.S., on Wednesday, Feb. 2, 2011. Photographer: Jin Lee/Bloomberg
Sept. 22 (Bloomberg) -- Barton Biggs, managing partner and co-founder of Traxis Partners LP, talks about the plunge in U.S. stocks and his investment strategy. Stocks slumped, giving the Dow Jones Industrial Average its biggest two-day decline since 2008, amid investors' concern that policy makers are running out of tools to avoid another global economic recession. Biggs speaks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Bets that stocks will gain make up 20 percent of Traxis Partners LLC’s holdings, down from as much as 85 percent six months ago, as the threat of a recession makes equities too risky, according to founder Barton Biggs.
“I wish I was minus 20,” Biggs said during an interview today on Bloomberg Television’s “Street Smart” with Matt Miller and Carol Massar. “I wish I was zero. I don’t think any place is a place to invest.”
The benchmark gauge for American equities lost 3.2 percent to 1,129.56 today, extending its weekly drop to 7.1 percent, on concern policy makers are running out of tools to avoid another global recession. Biggs said Aug. 18 that the S&P 500 may be bottoming after an 18 percent drop between April 29 and Aug. 8.
Markets are telling policy makers that “they’ve got to change and act or we’re going to go into a double-dip recession, and we’re going to go down another 20 percent,” said Biggs, whose equity purchases prior to the March 2009 market bottom sent his Traxis hedge fund to a 39 percent gain that year.
Biggs runs the Traxis Global Equity Macro Fund, which produced a 2.2 percent profit, net of fees, for investors in 2011 through the end of July, according to Adam Jaffe, the company’s chief operating officer. That compared with the 3.3 percent gain for the MSCI All-Country World Index of shares in 45 nations, including reinvested dividends.
“If we’re going into a global double-dip, corporate earnings projections for the U.S. and Europe are way too high,” Biggs said. “So there are major revisions coming.”
S&P 500 earnings are poised to reach a record $99.34 a share this year, according to the average analyst estimate in a Bloomberg survey. Analysts are more optimistic about earnings since the S&P 500 peaked at a three-year high on April 29, driving their forecast up from $98.73 a share that day.
“I want to see an important stimulus program in the United States, combined with major reform in social security, Medicare and our defense budget,” he said. “If we did that, we could have a 20 percent rally.”
To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Carol Massar in New York at cmassar@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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