In the third or fourth quarter, he thinks think money will come back to the industry with a vengeance. Pension funds are going to realize that their asset allocations are out of whack, Mr. Lo said.
DR. ANDREW W. LO
Founder and chief scientific officer
Alpha Simplex Group LLC
Cambridge, Mas.
Assets under management:
$800 million
Forecast:
"I think you'll see gridlock in the economy for the first two quarters of 2009," Mr. Lo said.
In the third or fourth quarter, he thinks think money will come back to the industry with a vengeance. Pension funds are going to realize that their asset allocations are out of whack, Mr. Lo said.
"I think the policies being discussed now are aimed an unfreezing the debt market. Once that becomes more liquid, bonds will start trading again. That will start an onslaught of managers in risk taking activities," Mr. Lo said.
The 2009 finish line:
The Dow: 8,600
The Nasdaq: 1,600
The S&P 500: 950
Tip sheet:
Favorite fund: Natixis ASG Global Alternatives Fund (GAFAX).
Favorite strategy: Global macro, distressed and equity market neutral.
Favorite sector: Green energy technologies.
Next big thing: "Beta replication, which involves the ability to sell short and take on common exposures like currency or commodity risk."
Biggest concern: "My concern is that the policymakers won't move quickly enough to restore confidence in the marketplace."
Reading, watching, listening to:
Book: "Hot, Flat and Crowded; Why We Need A Green Revolution — And How It Can Renew America" by Thomas L. Friedman (Farrar Straus & Giroux, 2008).
TV: CNN.
Radio: National Public Radio.
Websites: wsj.com, nytimes.com, ft.com.