Mohamed A. El-Erian , Columnist

How Portfolios Should Get Through This Market Volatility

The turmoil is payback for a period when markets were repressed by central banks and cash-rich corporations.

April 11, 2018 at 6:00 AM UTC

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.”

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The transition from liquidity-powered markets for risk assets to those influenced a lot more by fundamentals was never likely to be smooth, as it involved changes to drivers of investor behavior and market flows. Yet, despite this year’s unsettling spikes in high-frequency, two-way market moves, the right investment strategy is to “look through” the volatility.

Given the events in markets over the last few years, this approach has two main implications for long-term investors: On portfolio allocation, it calls for them to make either implicit or explicit calls on macroeconomic policies in the U.S., Europe and China, and on specific exposures, it requires them to take a view on key emerging trends.