Gold has been the same investment trend for some time now, but the difference lies in the fact that, ten years ago, it was known only to a small circle of people. Mike Wilson from Morgan Stanley said this to RiskReversal Media, who previously spoke about the attractiveness of the American stock market (see here). So how do you strategize on gold?
According to Wilson, there has been a shift in gold because ten years ago, when someone was talking about fiat currencies and their potential problems, not many people knew what they were talking about. According to the strategist, however, similar weights and investment theses are well known today. They did not have to change themselves, the shift occurred in how well they are known to the public and investors, moreover, the whole cryptocurrency industry was created. Added to this is the massive rise in gold prices, and while it may still not be a bad investment asset, according to the expert, other commodities may now be of interest. Wilson mentioned the equally strong rise in copper prices, which is played into the cards by the fact that it is also an industrially used commodity. However, the ratios of gold to silver and the prices of other commodities are strongly biased towards gold in a historical comparison. The strategist then developed this weight to the point that, according to him, investors should not only stick to long-term runs, it is also appropriate to think tactically. This can be manifested, for example, at a time when the cycle heats up the shares of smaller companies and it is certain that strong large companies are attractive in the long term. He added that Morgan Stanley is sometimes criticized for being «too tactical''. And it is true that such an approach sometimes really leads to an erroneous estimate of development. The strategist then added to the artificial intelligence stock market that the markets will also differentiate between how the company will finance investments in AI. It is then necessary to distinguish between bubbles and vortex cycles. According to the expert, the market will undergo corrections spilling over from one sector to another. In the discussion, he also pointed out that interest in the technological society has now cooled. The beginning of this year was so overall weak considering the fact that the Fed changed its policy and started buying assets in December. At the end of the interview, Wilson focused on mergers, acquisitions and primary share writings in the US market. According to him, the growth of new issues on the corporate bond market is alarming, so it is appropriate to ask why companies should not raise capital on the stock market. Here, according to the expert, a significant role is played by the fact that private equity investors are not very willing to sell even at current valuations. It would be better if more small companies entered the market, not fewer really big ones. In the second case, there would be a danger that large companies would suck up all the available liquidity with their «share writing'' and there would be no room left for another IPO. �I would like it to start slowly and in time big letters will come,� the expert added.