(Bloomberg) — The twin threats of inflation and Russia’s invasion of Ukraine make this a time to sell stocks and de-risk portfolios, contrary to recent market moves, according to Chris Ailman, chief investment officer of the second-largest U.S. pension fund.
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Stocks rose and bond prices fell this week after Federal Reserve Chairman Jerome Powell announced plans to raise interest rates in an effort to control rising inflation.
The stock “markets actually have their heads stuck in the sand,” Ailman, chief investment officer of the California State Teachers’ Retirement System, said during an interview Friday with David Westin on Bloomberg Wall Street Week. “The bond market, they’re awake and they’re paying attention.”
Ailman, who oversaw $318 billion as of Feb. 28, said stock and bond market declines have caused “a tough time” this year, but his portfolio has made some gains on real estate, private equity and other assets that adjust to inflation.
Not everyone agrees. Selling stocks now would be premature, according to Saira Malik, chief investment officer of Nuveen, who was also a guest on Wall Street Week.
“A lot of money can be left on the table during the early cycles of rate hikes,” Malik said.
She recommended buying Microsoft Corp. and Applied Materials Inc. as stocks with potential upside.
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