“The Sherman Show” guest Grant Williams brings his wide experience across asset classes and the world’s financial centers to this Feb. 8, 2021, episode with DoubleLine’s Jeffrey Sherman and Samuel Lau. Mr. Williams is a senior advisor to Matterhorn Asset Management AG in Switzerland, and a portfolio and strategy advisor to Vulpes Investment Management in Singapore. He is a co-founder of Real Vision, an on-demand internet-based ﬁnancial media platform, and writes the newsletter “Things That Make You Go Hmmm.….” In his more than 35 years in the financial markets, Mr. Williams has worked in postings to London, Tokyo, Hong Kong, Singapore, Sydney, New York and the Cayman Islands.
Amid market bubbles spurred by massive deficit spending and central bank monetary stimulus, Mr. Williams foresees the need to both hold cash against the ultimate bursting of those bubbles and to stress-test portfolios for inflation scenarios. “I wouldn’t shy away from starting to nibble at inflation trades even though they may not work for the near term,” he says. The prospective return of inflation “is arguably the most important secular change that we have to deal with in the last 40 years.”
Another secular change to prepare for, according to Mr. Williams, is value stocks breaking their long underperformance relative to growth and momentum stocks. “A few value managers that I’ve spoken to are starting to see people making inquiries, they’re starting to see inflows. That tells me that there could be a tremendous tailwind to that trade because value is so unloved at the moment.… You just have this beautiful setup where there are some great companies and great sectors that are really, really downtrodden and sold-out, and nobody wants to own them.”
Among the greatest and most-underappreciated risks in the present environment, Mr. Williams points to societal and political volatility as well as market volatility. “We are at a time where suppressed volatility is everywhere, and anytime you suppress volatility, at some point, … it’s going to explode.” After decades of the hollowing out of the middle class amid wealth creation that has privileged the people fortunate to be born in the 1960s, the millennial generation, whose leading edge is approaching age 40, is on the cusp of taking political power from the baby boomers. Having missed out on the wealth creation of the last two decades, he expects millennials elected to office to “make things right for their generation” by enacting policies redistributing that wealth.
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