Reuters News - Exclusive: Hedge Fund Elliott Says Stocks Could Fall 50% from February Highs

Article by Lawrence Delevingne and Svea Herbst-Baylissn in Reuters News

Billionaire Paul Singer’s Elliott Management said global stocks could tumble further, ultimately losing half or more of their value from February’s high, as the world braces for the deepest recession since the 1930s-era Great Depression.

The New York-based hedge fund firm, in a letter to clients on Wednesday seen by Reuters, wrote that the sharp market decline seen between late February and late March “provided a heavy bookend to a dozen years of basically nonstop positive returns in global stocks, bonds and real estate.”

And the rout is likely not yet over. 

“Our gut tells us that a 50% or deeper decline from the February top might be the ultimate path of global stock markets,” said Elliott, which controls $40.4 billion in assets and is closely watched for its views on markets and economics.

The hedge fund said gold, long a safe haven investment, and credit investments may be the most lucrative for investors as the world tries to climb out of the recession.

“This is a perfect environment for gold to take center stage,” the letter said, as spot gold traded at about $1,741 an ounce. Fair value for the metal, the fund believes “is literally multiples of its current price.”

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