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Investors are 'due for a very big wake-up call': top money manager

Why this influential money manager thinks investors are in for a rude awakening very soon. Read More...

Investors have seemed to forget about equities risk in September. But not one influential, veteran money manager.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“I think the markets independent of the [presidential] elections frankly are due for a very big wake-up call,” Ariel Investments Chief Investment Officer Rupal Bhansali said on Yahoo Finance’s&nbsp;On the Move. Bhansali has $13 billion under management at Aerial Investments and is the author of the new book ‘Non-Consensus Investing.’” data-reactid=”16″>“I think the markets independent of the [presidential] elections frankly are due for a very big wake-up call,” Ariel Investments Chief Investment Officer Rupal Bhansali said on Yahoo Finance’s On the Move. Bhansali has $13 billion under management at Aerial Investments and is the author of the new book ‘Non-Consensus Investing.’

Bhansali added, “I will tell you that in 2007 having been through markets and covering 50 countries, this playbook has been with us before. If you care to look back in history, Japan tried quantitative easing and it failed. Ultimately it’s about corporate earnings and balance sheets. Ultimately investors need to wean themselves off steroids.”

The stock market could experience a major setback this year, Bhansali thinks, adding that investors need to pay more attention to the recently soaring costs in the repo markets and sub-2% 10-year Treasury yield.

The unexpected

“People are not expecting it which is exactly why it could happen. The real disappointment is not going to come from earnings that everyone keeps watching, it’s about balance sheet risk,” said Bhansali.

Photo: Jin Lee/AP/dapd

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="To Bhansali’s point, investors, perhaps, have gotten too high on the hog this month. The S&amp;P 500, Dow Jones Industrial Average and Nasdaq Composite are all up almost 3% in September, despite no good news on the U.S.-China trade war front. High beta, momentum tech stocks such as Facebook (FB) and Alphabet (GOOG) have led the markets higher.” data-reactid=”32″>To Bhansali’s point, investors, perhaps, have gotten too high on the hog this month. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite are all up almost 3% in September, despite no good news on the U.S.-China trade war front. High beta, momentum tech stocks such as Facebook (FB) and Alphabet (GOOG) have led the markets higher.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Meanwhile, the CBOE Volatility Index (VIX) — aka Wall Street’s fear gauge — is hovering around the lows of the year.” data-reactid=”33″>Meanwhile, the CBOE Volatility Index (VIX) — aka Wall Street’s fear gauge — is hovering around the lows of the year.

So, given that complacency, it’s not far-fetched investors could be badly caught off guard in the fourth quarter. Sometimes it pays — handsomely — to be a contrarian investor like Bhansali.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi” data-reactid=”35″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read the latest financial and business news from Yahoo Finance” data-reactid=”36″>Read the latest financial and business news from Yahoo Finance

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.” data-reactid=”42″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

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