In a statement today, Hollings says: “Whilst I have utmost respect for Anthony Bolton and whilst his track record up to one year ago was very good, I don’t understand how anyone can “call the bottom” in a market like this. And even if, by luck, he has got his call right and it’s not looking too clever so far, are the returns that you might generate by buying stocks justified by the risks you are being asked to take ? In my opinion…not.”
Hollings believes there is a continued case for investment in absolute return funds.
He adds: “Given the very serious nature of the paralysis in credit markets it is becoming harder and harder for business and consumers to get any kind of credit at any sensible price. This is hardly positive for equity valuations. Further lack of credit will force companies to cut dividends quite sharply to conserve working capital. It will also force consumers to ease off big time on their credit card purchase. It means the housing market will also struggle to function normally, thereby depressing prices further. Again not exactly a bullish prognosis for equities.”
Hollings argues that the market, fueled by credit for the last twenty years, is only just beginning to de-leverage.