Gary Shilling: Investor Exuberance Is ‘Irrational’

Economist and investment advisor A. Gary Shilling reiterated his “risk off” strategy on Friday, calling current market exuberance irrational.

Shilling, anticipating credit tightening and a recession, recommended a risk-off strategy in January 2022, and in May last year expanded its recommendations to a nine-strategy list, given his belief that U.S. stocks had entered a bear market.

That list remains in place, he noted in his August Insight newsletter, released Friday.

“This strategy still seems appropriate to us. Persistent gains in employment and high inflation only imply further credit tightening by the Fed, which will break the economy if a recession is not already underway,” he said.

“Nevertheless, security markets recently have been in a ‘risk on’ state, led by the 19% rise in the S&P 500 index so far this year and investor conviction that a ‘soft landing’ with no recession is likely.