Theo Zemek, AXA Investment Managers‘ global head of fixed income, says investors should adopt “Quaker investment policies” – sober and safe investment strategies that can be explained to their grandmothers.
“Anyone who utters the word ‘hedge’, after all these CDS (failures), ought to be taken out and be shot,” the 25-year markets veteran told a media briefing.
“This is the scariest market I’ve ever seen in 25 years. The world of complex instruments, credit guarantees… That world is very much an ancient history… It’s a darn tough market. Who is left standing among our counterparties?”
Zemek said she overheard commuters on the train discussing the new preference for simplicity in investment strategy and citing Goldman Sach’s chief global economist Jim O’Neill as saying: “Anyone who thinks they understand what’s going on is guaranteed to be an idiot.”
AXA IM’s parent company AXA said last week that it has a non-material equity interest and credit exposure in Lehman Brothers (collapsed) and AIG (bailed out).