Stock Rally Is a Bear-Market Trap, Top-Ranked Fund Managers Say
- Muhlenkamp Fund has 35% in cash in part to prepare for worst
- Abate sees litany of risks and adds hedges via put options
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Despite enduring a brutal start to the year for their portfolios thanks to a surprise market rally, two top-ranked fund managers are sticking to the bearish views that made them winners in the 2022 stock crash.
Jeff Muhlenkamp, whose Muhlenkamp Fund delivered a positive return last year, says elevated interest rates will continue to sow market havoc even though it’s likely that the Federal Reserve will engineer a soft landing. Moreover, there is a risk that the aggressive policy tightening ends with a recession, with a worst-case scenario that the S&P 500 drops a whopping 30% from Thursday’s close. His fund currently holds more than one third of its money in cash.