Echoing warnings from the world’s largest hedge fund, Bridgewater, “a bigger shakeout is coming,” and Europe’s largest asset manager, Amundi, “let the dust settle,” as well as a plethora of other industry experts with more ‘skin in the game’ than the usual commission-taker that confirms this as a “healthy correction,” the CIO of Europe’s largest publicly-traded hedge fund, is warning investors to resist the urge to ‘buy the dip’ or chase this rip.
There is certainly a lot interest in “buying the dip”…
But as Bloomberg reports, Pierre-Henri Flamand, the chief investment officer of Man Group Plc’s GLG unit, said market swings could continue and warned:
“The instinctive inclination to ‘buy-the-dip’ may be strong,” said Flamand in an e-mailed response to questions from Bloomberg.
“As the past week has shown, this may not work so well. Indeed, I think what we have seen in the past week could continue for some time.”
Seeds were being sown for “a particularly vicious correction,” Flamand said in a January commentary before the market rout.
At the time, he said the market appeared to be moving into the fifth stage of Ralph Nelson Elliott’s wave model of technical analysis of market trends, in which everyone stands firmly behind the positive news.
“The current period of stability has overtaken 1965, and only once since 1920-1995 has the market enjoyed a longer run without a 5 percent fall,” he wrote in the commentary.
“While the fifth wave can last for weeks, months or even years, it inevitably precludes a significant market correction, on average giving up between 38 percent and 50 percent of all gains.”
Now that would be a dip some might consider buying?
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