in an interview this week. There are opportunities in areas like treasury bills and short-term bonds, dividend stocks, AI, even the auto industry. But exploiting them will require investors to look beyond strategies that worked well for the past 30 or 40 years. Mr. Reiman spoke to The Globe about the second half outlook from BlackRock, a global investing giant.
Q: Something that hits home in the outlook is the view that inflation will be sticky, and that central banks will not be able to lower rates to where they were before the pandemic. Can you explain your thinking? A: I think one way would be just looking at what you can find on the front end of the yield curve [treasury bills and short-term bonds]. There is an opportunity that we haven’t seen in a couple of decades: you can generate around 5 per cent. With inflation having declined this year, this 5 per cent yield is not just high in nominal terms, it’s also positive in real terms. So that means it compensates investors for inflation.
Q: Autos? I cannot remember the last time somebody suggested the auto industry was an exciting investment opportunity. A: What’s different is that, even on a strategic horizon over a longer term where maybe you’re saving for retirement or a philanthropic objective, you’re going to have to be more nimble. You’re going to have to get more granular and make more frequent changes to a portfolio in order to achieve our objectives. A set-it-and-forget it mindset worked over the past 30 to 40 years, but it’s not the strategy that we think is going to lead to successful outcomes over the next five to 10.