Mark Mobius: 'Tremendous Bull Markets' Ahead

Sunday, 07 Apr 2013 10:40 AM

By Michelle Smith

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People are starting to realize that stock markets are the place to be, and with more people moving in that direction “tremendous bull markets” lie ahead, Mark Mobius, executive chairman of Templeton Emerging Markets Group, predicted on CNBC.

Rallying equity markets have been all the buzz since the start of the year.

Back in January, when less than two weeks into the new year, Business Insider reported that $7.4 billion in inflows into emerging-market equity funds was the highest of all time. “A new year, memories of 2012 returns, zero rates, “the fiscal whiff”... whatever the reason investors, capitulated into equities this week,” Bank of America strategist Michael Hartnett was quoted as saying.

Declassified:
‘Financial War’ Could Wipe Out 50% of Your Wealth’

The shift into equities hasn't stopped, and Mobius doesn't think that it will. On the contrary, he expects the trend to accelerate.

“People are now beginning to wake up to the reality that they've got to get into equities. They cannot continue to hold fixed income assets that are paying 0.2, 0.5, or even 1 [percent] because they are going going backwards,” he told CNBC.

Financial Advisor magazine described the yield on fixed income as “pretty gruesome.”

“The actual real yield is below zero,” Jeremy Held, research director of exchange-traded fund provider ALPS said in that article. “We haven't had a sustained negative real rate of return environment like this since the 1940s. And during the decade of the '40s, investors lost half of their purchasing power,” he added.

Mobius says looking around the globe now, investors can see that dividend yields in many markets are 3 percent.

Investors need growth and they are going to go after it, according to Mobius. Even though he manages money for a living, he conceded that he still has nearly a third of his personal portfolio in cash.

Mobius said it is crazy for him to be sitting on cash. But he is not an exception to human nature. “It's inertia,” he said. “You don't get around to it and then suddenly you say, it's time to get into equities.

“It takes time,” he told CNBC. “People don't move very fast but once they move, then you're going to see tremendous bull markets. We're already seeing a very significant bull market, but this is just the beginning, as far as I'm concerned.”

Declassified: ‘Financial War’ Could Wipe Out 50% of Your Wealth’

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