Mohamed A. El-Erian , Columnist

Why Only a Huge Shock Will Deter Risk-Taking Investors

Conditioned by the Fed and three new mantras, investors are anchored in the expectation of never-ending stock index records.

August 16, 2021 at 10:00 AM UTC

By Mohamed A. El-Erian

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

“Never fight the Fed,” is still working for the stock market.
Photographer: Michael Nagle/Bloomberg

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

When I began to work directly in financial markets in 1998, after 15 years at the International Monetary Fund, I remember being particularly struck by the conviction my new colleagues had in two often-repeated mantras: “Never fight the Fed” and “the trend is your friend.”

Such deep-rooted conviction not only informed their views but also influenced their trading and longer-term portfolio positioning. That conviction has not diminished in any way since then. Indeed, it is strongly in play now and has given birth to three other mantras that now roll off the lips of market participants just as easily as the other two.