Investors' only bet for making money in current environment is to stay long stocks and 'enjoy the Fed support,' Skybridge Capital co-CIO says
- Troy Gayeski, co-CIO of Skybridge Capital, said to be long stocks and "enjoy the Fed support" to make money right now.
- He explained two factors behind this call: the divergence of the stock market and real economy, and the Fed's balance sheet.
- Gayeski said the US is facing a "historic divergence" between real economic outcome and the stock market.
- Read More on Business Insider.
Troy Gayeski, co-CIO of Skybridge Capital, told Bloomberg on Friday that the only way to make money is to be long equities and "enjoy the Fed support."
The investor made this call from two factors: the divergence between the stock market and the real economy, and the Fed's balance sheet.
Gayeski said the US is facing a "historic divergence" between real economic outcomes and the stock market. This is in part because big tech is dominating the S&P 500, he added. The top five names in the index — Microsoft, Apple, Amazon, Facebook, and Alphabet — are up 275% since the beginning of 2015, while the rest of the stock market is up 25%, he said.
Gayeski added that the Fed's balance sheet is also supporting the stock market. "Even though it has contracted by about $250 billion in the past five weeks as they've taken repo down, it's still up $2.75 trillion," he explained.
"So those two factors mean asset reflation is here, and really the only way to make money is to be long equities and also be long credit, and enjoy the Fed support," Gayeski said.
The investor also said that another round of stimulus is a "necessity now."