More Bumps Ahead

Focus: MARKETS

Jack Ablin Image Jack Ablin CIO & Executive Vice President, BMO Private Bank

The markets will see more bubbles and declines as long as policymakers avoid the real debt issues...but once taken care of, a big bull market could shine through, says Jack Ablin.

Jack, it’s great to have you with us...but we sure are in a tough quandary. All of you folks who are with the large trust companies and the large banks have got to be challenged right now, given the returns that you are getting from typical retirement-oriented investments like bonds, and even dividend-paying stocks with the volatility.

So what have you devised for this? You are not one for hedge funds in many of the accounts are you? What is your view?

No, no, we generally like liquidity. We want to be able to have the agility to change our risk around as the markets change.

Unfortunately, private partnerships and hedge funds don’t give us the flexibility to get our money back right away, so we have generally avoided that area, but you are right. I mean, this is that whole area where we have really lost sleep at night for our clients.

The fact is that policymakers, both monetary and fiscal, are deliberately running a policy where they want to keep inflation higher than interest rates, and for retirees that is really a lower standard of living if left unchecked.

We started worrying about this in 2006. Recognizing that, we built a strategy we call our diversified income strategy in 2007, launched it then, and it is a diversified portfolio of income-producing vehicles, diversified in a way to manage risk and return.

And it has done great.