Pimco's Fels Sees End of 'Buy and Hold' Strategy

The video discusses the changing market environment, highlighting that the high returns and low volatility of the past decade are unlikely to continue. It emphasizes the need for active management due to high valuations and potential disruptions. The discussion also covers the limitations of quantitative easing and low yields in ensuring market outperformance, drawing lessons from Europe and Japan. Additionally, it addresses economic trends such as deglobalization and shifts from shareholder to stakeholder value, which may impact corporate profits and market returns.

What is the expected change in market returns and volatility over the next five years?

• Unpredictable returns and stable volatility

• Stable returns and volatility

• Lower returns and higher volatility

• Higher returns and lower volatility

Why might the 'buy and hold' strategy be less effective in the future?

• Due to the rise of passive investment strategies

• Because of increasing market stability

• Due to the need for more active management

• Because of decreasing market opportunities

What lesson can be learned from the experiences of Europe and Japan regarding QE?

• QE always guarantees high returns

• High yields are detrimental to risk assets

• Low yields ensure economic growth

• QE and low rates do not guarantee excess returns

What is a potential reason for the end of the outperformance of earnings over GDP growth?

• Increased globalization

• Focus on shareholder value

• Decreased corporate taxes

• Deglobalization and re-regulation

What trend is shifting within corporations that might affect future earnings growth?

• Decreased regulatory oversight

• Increased profit margins

• A focus on stakeholder value

• A focus on shareholder value