Investors’ Shift From Fear to Greed Presents Historic Opportunities

We started RBA in 2009 primarily because we thought the US stock market was entering one of the biggest bull markets of our careers. Simply put, if one was going to start a firm, it seemed like a good time to do so.

However, most investors did not agree with our bullishness. The Global Financial Crisis and the ensuing bear market damaged investor psychology and investors were extremely wary of US equities. The widespread consensus was one should invest in emerging markets for growth and investing in the US was imprudent.

The risk-averse consensus rebuked us for our bullish views of US equities.

  • Many investors summarily dismissed even meeting with us because they felt we were too bullish on the US.

  • A major fund research firm refused to classify our global equity fund as a global fund because they believed our active exposure to the US equity market was too large.

  • Marketing pitches necessarily incorporated a description of “fire extinguishers” or strategies we could employ to protect the portfolio in case our bullishness proved foolhardy.

  • Investors questioned why our multi-asset portfolios weren’t heavily weighted in fixed-income and dividend-oriented stocks.

  • There were even ad hominem attacks regarding our motivation, our backgrounds, and other irrelevant issues.

Fourteen years later investors’ extreme risk aversion has become extreme risk taking. Today we are viewed by many as not being bullish enough and the ad hominem attacks have returned.