From Pragmatic Capitalism:
That’s the message coming out of a prominent European hedge-fund manager. Jamil Baz of GLG Partners told investors at a conference yesterday that the crisis could last another 15-20 years. Some of the key insights (via Reuters):
“This crisis has not even started. It will take an extremely long time to reach its peak velocity, and by a long time I mean at least 15-20 years,” Baz, who co-manages GLG’s Atlas Macro fund, told delegates on Tuesday.
“The economic impact of this crisis will be devastating,” he added. “Risky assets will look very ugly as a result.”
He estimates that the implied equity risk premium – the extra return the stock market must provide over the return on government bonds to compensate for market risk – was likely to be less than three percent, below current consensus.
This means, believe it or not, that equities are still expensive (relative) to bonds.
However, he said that…