Dimensional Fund Advisors LP Chairman David Booth said investors’ bullish view on the U.S. makes him nervous about the growth prospects for the world’s largest economy and that Europe may not fair as badly in 2012 as people think.
“Generally, when there is a consensus that is a good time to take the other side,” Booth, whose firm oversees $200 billion, said in an interview with Bloomberg Television’s Erik Schatzker today from the World Economic Forum in Davos, Switzerland. With assets prices in Europe already driven down by negative sentiment, “the higher your expected return” may be, he said.
“I wouldn’t be too surprised if this turned out to be a good market,” said Booth of Austin, Texas-based Dimensional.
Investors are turning increasingly bullish on the U.S. with 48 percent of respondents to a Bloomberg poll predicting it will be among the world’s best-performing markets this year. That’s the highest rating for the U.S. since the poll began in 2009 and it’s more than twice that of Brazil and China, the markets ranked second.
On Europe, 48 percent of respondents identified it as among the worst markets to invest and 67 percent predict that any improvement in the region’s sovereign-debt crisis will be temporary, according to the poll of Bloomberg subscribers conducted Jan. 23-24.
The potential growth of the U.S. economy depends “very little” on who wins the presidential election in November, Booth said. The investor said he doesn’t back Democratic President Barack Obama or any of his Republican rivals, opting to support “none of the above.”