Lessons from 1987 market crash, banking crisis, Jonathan Hirtle

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Jonathan Hirtle launched his $18 billion firm in the wake of the 1987 market crash. He told us what he's holding for the long haul, and what's different about the current bank crisis.

Jonathan Hirtle founded his firm 45 years ago, and it now manages $18 billion in wealth.Hirtle also discussed how he's investing clients' money and his long-term market views.

"This doesn't feel like '87 to me at all: '87 was technical, it was a trading drop. This is fundamental," he said, meaning that the cause was a combination of excesses in the tech industry and interest rates that have risen significantly. But unlike 2008, he says there's no sign of a threat to the global financial system or the world economy.

Still, he says that global diversification, and diversification across stocks, bonds, and private equity is important for the long term. He prefers stocks to bonds, but says that Treasury Inflation-Protected Securities are attractive right now, especially for tax-exempt clients.Hirtle says that in the years since 1987, investors have emphasized short-term trading to a larger extent and focused less on long-term investing. In the short term, what matters is that the financial system is healthy.

Another is that long-term gains tend to be more gradual. In the 2010s bull market, stocks rose about 400% in a little under 11 years. That's about 15% per year, according to S&P Global. But historically, nominal gains of about 6% — or around 4% after inflation — are more standard.

 

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