Investment Chief Predicts Decade Of 'Austerity' For Markets: 'Game Of Macroeconomic Musical Chairs Cannot Go On Forever'

The era of abundance in the investment world is transitioning towards austerity, posing challenges for equity and long-term fixed-income markets, according to Jim Masturzo, Chief Investment Officer at Research Affiliates.

Masturzo suggests a new cycle of normalization, driven by a decade of austerity, is on the horizon, marking a significant shift from the post-2008 financial crash era of ultra-low interest rates, reported Business Insider.

“We see the current selloff as a potential inflection point in the transition from a decade of abundance to one of austerity,” Masturzo wrote.

See Also: Bitcoin, Ethereum, Dogecoin Rally Keeps Weekend Momentum Intact — Analyst Sees Apex Crypto Flashing Signal That Sparked 400% Surge

With the Federal Reserve’s interest rates rising to between 5.25%-5.50%, the investing environment shifts. Higher rates are expected to lower asset prices, causing a cycle of lower capital gains and tax receipts, leading to increased borrowing and spiraling debt.

“While no one stopped the music for the better part of the last 15 years, this game of macroeconomic musical chairs cannot go on forever,” Masturzo said. 

Masturzo advises investors to brace for long-term elevated inflation, suggesting safe havens like gold, real estate, and certain digital assets. He also recommends Treasury Inflation-Protected Securities over bonds and value stocks over growth investments, given the anticipated high U.S. debt levels.

Emerging markets are also of interest, as a depreciating dollar and access to high-demand commodities make them attractive for growth.

Read Next: Peter Thiel, Mark Cuban and Warren Buffet funded early-stage startups and made millions. You don't need to be a well-connected billionaire to do the same. Click here to invest in promising startups today

Image via Shutterstock