Portfolio Manager Perspectives

Jeff Benjamin

Why Stanley Crouch is playing defense

Sep 30, 2012 @ 12:01 am

By Jeff Benjamin

As market watchers debate whether it is too late to catch a piece of the current rally, Stanley Crouch is already playing defense in anticipation of a correction.

“I think we have the potential for a pretty significant drop after a very long and meandering rise from the most recent bottom in June,” said Mr. Crouch, chief investment officer at Aegis Capital Corp., a $2 billion asset management firm.

Citing what he described as “artificial support and synthetic intervention from central bankers,” he is forecasting an equity market correction of between “15% and 25% in coming weeks.”

Mr. Crouch believes a sentiment shift is unfolding in which the markets realize that “there is no central bank put,” and macro deterioration cannot easily be stemmed.

The forecast is based both on recent market patterns and technical fundamentals showing divergence between some major sectors, he said.

“I liken it to a freckled swan, which is a swan with the marks of all the various things out there that everyone knows about,” he said.

“Take your pick — there are lots of reasons to be concerned right now.”

As precedents, he noted the sudden double-digit stock market declines that occurred during the summer months of 2010 and 2011.

“Those were both interim tops followed by declines,” Mr. Crouch said. “They were both meandering rises that met with sharp declines, and this market looks a heck of a lot like those markets did.”

Mr. Crouch is allocating to cash and dividend-paying stocks, and he is adding some short positions.

“The model for this environment is very defensive,” he said.

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. Visit InvestmentNews.com/ pmperspectives to read others.

jbenjamin@investmentnews.com Twitter: @jeff_benjamin

0
Comments

What do you think?

View comments

Most watched

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Latest news & opinion

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

LTC insurer offering co-pays to blunt soaring premium increases

John Hancock policyholders would get a discount on their premium in return for agreeing to pay a bigger portion of their claims in the future.

Goldman Sachs acquires United Capital

After a payday of $75 million or more, CEO Joe Duran plans to join Goldman in a senior position.

Private equity loves IBDs, but will that last?

Three big acquisitions in less than a year signals renewed life in the formerly beleaguered industry.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print