Stock market crash: Big investors warn 'fantasy' rally is doomed - Business Insider

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The world's biggest investors are notoriously skeptical of the stock market's bet for a quick economic recovery — and warning that the 'fantasy' rally will soon come crashing down

The gradual reopening of shuttered businesses by states — including all 50 as of last week — is boosting investors' confidence that the coronavirus-driven recession will be sharp but brief.

"The risk-reward for equity is maybe as bad as I've seen it in my career," Druckenmiller recently told the Economic Club of New York during a virtual event. He worries too many investors expect that new liquidity from the Fed will flow into the markets indefinitely following a few strong months. "If you're going to have all these people unemployed, it's hard to end up coming out of a recession until that changes," Lasry said. "It's going to be a difficult couple years."

A Goldman Sachs report on mutual fund holdings further exposed how some of these managers are expressing their views in portfolios. The net result of their allocation shifts is a reluctance to price in a brisk comeback. Instead of these characteristics, mutual funds prized stocks with balance sheets that are strong enough to weather a widespread solvency crisis.

 

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