Market Watch: Brace for Unpredictable Markets after a Decade of Extreme and Unusual Policies

Article by Shawn Langlois in Wall Street Journal Market Watch

Traders might feel compelled to dust off their playbooks for late-cycle investing lately, says AllianceBernstein strategist Richard Brink, but this isn’t your typical late cycle, and typical late-cycle responses might not apply this time around.

“Today’s market has been shaped by extreme and unusual policies over a decade,” Brink wrote in a recent note co-wrote by AB portfolio manager Walt Czaicki. “Fiscal stimulus, debt levels, deficits and demographics are adding some uncommon ingredients into the late-cycle stew. Taken together, these could extend the late-stage features of the current cycle for much longer than usual.”

In other words, the rich returns of the past decade weren’t driven by economic or corporate growth, but by a flood of cheap and easy money.

With it all coming to an end, Brink warns, the next decade won’t be nearly as friendly for investors, as the fiscal deficit widens, the debt burden balloons, baby boomers retire and geopolitical tensions mount. So what’s an investor to do?

To read this article in Wall Street Journal Market Watch, click here.