Paul Tudor Jones is one the most successful investors in the world, who gained fame and fortune by predicting Black Monday stock market crash (October 19, 1987). We found it interesting to hear what he had to say in a recent Bloomberg interview about the current capital market trends, the US recession and what he thinks the best trade in the next two years would be.
In the beginning, Mr. Jones talked about the differences between the current capital market trends and those of almost 50 years ago, pointing out that nowadays profit has become the ultimate and the only goal of any business. Namely, in 1970, around 6.5% of corporate profits was being delivered to shareholders, whereas now that number grew almost by double, or more specifically to 13%. And this happened without the involvement of Congress or anything such, it happened naturally, “as we took everything out of the equation of what the true purpose of a company is other than to make a profit”. Consequences? “Wealth inequality five times what it was 50 years ago”. Unbelievably, around 20 richest Americans have as much money as the poorest 175 million Americans. Mr. Jones further pointed out that if we don’t find a way to resolve this huge asymmetry, we’ll suffer serious consequences.
A word on tariffs, Mr. Jones fears that the tariffs could seriously affect the economy. Depending, of course, on the amount, but he thinks that if they reach $500 billion, it could present the tipping point of pushing us into recession. He stressed out that we haven’t seen something similar in 75 years, that this is the first time in that period free-trade is being reduced, so we can’t really predict the outcome. When it comes to Mr. Jones’ best pick for trade in the next two years, as a macro trader, he would choose gold. He further explained that if it can reach $1,400 an ounce, it will most probably hit $1,700 very soon, “It has everything going for it”.
More details from the interview you can find in the video below.
This article is originally published at Insider Monkey.