Continuing with our series of interviews with investment professionals, we have Mr. Ray Barros with us today. Ray is a professional trader, fund manager, author and educator who have over 30 years of trading experience. He has an impressive track record that reflects a whopping 39 percent per annum returns on a compound basis!
Ray would also be speaking at this year’s edition of the Investor Wealth Summit. Below, he answers a few questions we have for him about the current investment climate and touches on the opportunities available for retail investors today.
Looking at the world’s stock markets now, what are your chief concerns as a trader? Do you see any red flags that investors or traders need to take note of?
Ray: There is a grand-daddy of a possible financial crisis brewing in bonds and the stock market. The problem is the unwinding of QE.
How the FED will unwind QE without severe adverse consequences is anyone’s guess.
We have trillions of dollars sitting the banking system. As that liquidity finds its way into the economy, rates will rise. Even if we only return to the average zone, this means long-term maturity rates of 8%-10%.
You can imagine the effect rates at 8%-10% would mean to the property market and stocks. We are seeing a small decline in stocks, at time of writing, just because the FED may raise rates later in 2015.
Would you invest or trade in today’s climate?
Ray: If not already investment, I would not initiate investments in property and stocks. And, as for gold, I would need to see a significant rise in inflation before buying. So, the short answer for investing is ‘no’.
As for trading, ‘yes’. I see great opportunities in seeking to go long the USD and short Bond futures. (Bond futures are inverse to bond yields. When futures drop, yields go up)
In a climate of low but possibly rising interest rates, low global growth, in your opinion, what is the right mindset investors and traders should have?
Ray: That of a ‘preservation-of-capital’ trader.
There are many amazing short-term trading opportunities – ones that offer relatively low risk, high return. However, if you are not at the stage where you can spot them, get an education and ensure that you are taking steps to protect your capital before trading.
In short, my philosophy for trading (and hence my mindset) can be summed up by the following 3 points:
- Capital preservation
- Consistent execution of my money and method rules; and only then
- Pursuit of superior returns.
Featured Image Credits: tradingsuccess.com