Klaus Wellershoff: ‘it’s easier than ever to predict the future’

FRANCE: Leading market expert Klaus Wellershoff believes that despite all the uncertainty surrounding the global economy it has never been easier to predict what the future holds for investors.

Keynote speaker at the Citywire Global France Retreat in Chantilly, the former UBS chief economist told the assembled audience on Thursday: ‘I have been running around for the last 17 years talking about the future of the economy. Every year people have been saying this year is more difficult than at anytime before and for the first time I feel I have to object. It has never been easier to predict what the future holds than today.’

For Wellershoff, the global trends are clear for everyone to see but many managers have not yet incorporated them into their strategy.

‘We have almost the certainty that growth trends will be lower than in the past,’ said Wellershoff. ‘Even under the most optimistic assumptions of the future we can deduce that growth will be lower.’

He also said the predictability of the interest rate outlook was also another factor which was being overlooked.

‘Do not expect to see another 30 years of falling interest rates.’

‘Interest rates can remain low for a prolonged period of time, nobody can tell you when they are going to rise. But do not bet your strategy on this revaluations game on interest rates falling as we go forward.’

Although many managers are likely to be aware of this situation, many have not taken it into account in their portfolios, he said, and risk losing out.

‘Change your asset allocation, in all likelihood it is wrong, plain wrong, as it is built on assumptions that cannot be upheld, even in the current environment.’

‘We now have a situation that is clearly unsustainable. Think of the debt situation, the deficit, the almost zero interest rates. These are things we know will not be the same in maybe two years time and will revert to their normal state.’