Pimco’s El-Erian: Beware of Value Traps, Seek Catalysts

Pimco Co-CEO Mohamed El-Erian tells CNBC that “every investor should go back to the basics” in 2009. According to El-Erian, investors need to focus on “diversified asset allocation, good implementation vehicles, and solid risk management”. El-Erian believes equities could lag until investor confidence improves and warns that some investments could be value traps — meaning their attractive valuations alone aren’t enough reason to invest in them and that they could fall further. Instead he says “don’t fall into that (value) trap … rather, go for those assets that are not only dislocated but where there’s a catalyst for normalization, where […]

PIMCO Co-CEO Calls for “New Thinking”

PIMCO’s Mohamed El-Erian says that “Only New Thinking Will Save the Global Economy”. El-Erian believes that the situation will get worse before it gets better, saying that we are moving toward a “different destination” and one that results in “more market accidents, disorderly sectoral realignments and additional shifts in policy.” He goes on to say that “we are also in the midst of a prolonged increase in precautionary behavior among entities that have suffered massive wealth destruction and face a multi-year clean-up of assets and businesses. Without further adjustments, there will be an aggravation of the negative feedback loops that […]