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One of the biggest hedge funds reveals why it is cautious about stocks at the moment

Jamie Cameron
10. 4. 2023
3 min read

Man Group deputy chief executive Mark Jones has a pessimistic outlook for the stock. Despite a rally that has recovered from the recent market turmoil, Jones said: "The risk and reward for equities is currently disproportionate, citing deteriorating fundamentals, macroeconomic hurdles and investors pulling money out of equities.

Man Group is a UK-based global investment company with approximately $109 billion in assets under management. It is the largest publicly traded hedge fund in the world. Man Group invests in a wide range of financial markets and instruments using a variety of investment styles including long-term trend, numerical and fundamental approaches across equity markets, currency markets, credit markets and derivatives trading.

Man Group was founded in 1783 and is headquartered in London. It has offices throughout Europe, North America, Asia and the Middle East. The company is listed on the London Stock Exchange and is part of the FTSE 250 index.

With such extensive experience and expertise in the financial markets, Man Group has an exceptional ability to assess global economic and market trends. Investors should therefore pay close attention to Mark Jones when he expresses caution about current stock valuations. As Deputy CEO of this large firm with a wealth of experience, Jones has access to a wide range of data and analysis that leads him to his pessimistic stance. Given Man Group's long history of successful investments, it is worth taking seriously Jones' warnings about risks that could unpleasantly surprise investors focused primarily on potential returns.

Mark Jones, deputy chief executive of Man Group, the largest publicly traded hedge fund, is cautious about stocks despite the stock rally that has overcome the March banking chaos and the markets' apparent appreciation of the economy's soft landing.

In his Bloomberg What Goes Up podcast on Friday, Jones said, "There's an insidious force on real assets that hasn't been around for a long time. I think the risk and reward for equities is very uneven right now."

Jones said that equity fundamentals are likely to deteriorate, adding that there is potential for further downgrades to companies' earnings expectations. Goldman Sachs strategists expect U.S. companies' earnings in the upcoming earnings season to fall the most since the start of the COVID-19 pandemic, with earnings per share expected to fall 7% year over year, according to a note the bank released last week.

Jones also said investors are shifting money out of stocks and into alternatives such as government bonds and corporate loans. He said, "Whether it's consumers or large institutional clients who are starting to return to an asset class that has frankly been relatively out of favor, some of that flow of funds is also a problem for equities because people are just moving money around."

In support of this claim, Goldman Sachs estimates that U.S. households will sell $750 billion worth of stocks this year due to higher interest rates and sustained inflation.

Jones' comment is one of the few cautious views on stocks, while most strategists expect the U.S. economy to make a soft landing this year even if macroeconomic problems continue. Jones' concerns are based on fundamental and macroeconomic factors that he believes investors are currently under-pricing.

Please note that this is not financial advice.

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