At 78, Investor Preps for ‘Biggest Bear Market in My Life’
David Wright knows a thing or two about bear markets.
His Sierra Tactical All Asset Fund barely lost anything in 2008 as the global financial crisis caused the worst market panic since the Great Depression. Its loss during the Covid rout of 2020 was also relatively small. Wright, who is based in Santa Monica, California, says another private fund he runs didn’t lose a penny when the dot-com bubble burst two decades ago.
But none of those periods compare with what’s ahead, according to Wright. Stocks and bonds have already fallen hard in 2022. Much more is coming, the 78-year-old said in an interview.
“I believe we are in the biggest bear market in my life,” said Wright, co-founder of Sierra Investment Management, which oversees about $10 billion. “This is just the second inning. A lot more to come.”
There are no shortage of bears making similar claims these days. Between the Russia-Ukraine war, the aggressive tightening by the Federal Reserve, soaring inflation and Covid lockdowns in China, there are plenty things to worry about. The S&P 500 has already lost 12% this year, while the Nasdaq Composite cratered into a bear market after sliding more than 20% from its peak in November. Key bond benchmarks are down more than 10%.
But what’s unique about Sierra is its aggressive approach to shed risk. The $869 million Sierra Tactical All Asset Fund -- a so-called fund of funds that invests in mutual funds and exchange-traded funds, held less than 3% in U.S. stocks at the end of April. More than half of the fund is in cash. Fixed-rated bonds accounted for only 1% of its holdings, while commodities made up more than 9%. The rest of the portfolio is spread across assets including floating-rate bonds, foreign stocks and master limited partnerships.