Allianz chief advisor Mohamed El-Erian continues to rely on tech companies in the United States and a large proportion of cash in his portfolio even after the stock market recovery. In mid-March, he set four criteria for further share purchases, El-Erian revealed in an interview with Personal-Financial.com (issue 6/2020). These included strong balance sheets, positive cash flow, good management and the prospect that companies could develop well even after the crisis.
“Companies that meet these criteria include Microsoft, Alphabet, and Netflix. If you invest in the US stock market, they are a good chance for price gains, ”said El-Erian. Although he has already sold the shares again in the meantime, the three tech groups are “great companies”. “If there is a price correction again, you can very selectively buy the companies that will do well,” continues El-Erian. In order to be able to get started in this case, he remains with Cash until then.
El-Erian sees considerable risks in the expansionary monetary policy pursued to limit the economic consequential damage. “One of the risks on this path is that we will no longer only have the so-called zombie companies – companies that would have long since disappeared from the market without low interest rates. We will also have more zombie markets, ”said El-Erian.
In addition, the former head of the investment company Pimco warned of a new crisis in the emerging countries due to the corona pandemic and rising debt. “The West can do whatever it takes, the underdeveloped countries can’t,” El-Erian told Personal-Financial.com. “The increase in debt, and so far has hardly been discussed, will lead to more defaults in weak countries, especially in the developing world. The market has not yet realized that many countries do not have the resilience of Germany. “
The article was published in Personal-Financial.com 4/2020. interested in Personal-Financial.com? Click here for the Subscription shopwhere you can order the print edition. Our digital edition is available at iTunes and GooglePlay