Raoul Pal, a former Europe hedge fund sales lead at Goldman Sachs, is preparing for the financial system to enter a massive world of hurt.
In a recent Lindzanity podcast with host Howard Lindzon, the investment strategist and founder of Global Macro Investor and Real Vision Group predicts a 20% plunge in equities in the short term before a three or four-month bounce. But in the long run, Pal expects many companies to go belly up as the novel coronavirus cripples multiple sectors of the economy.
“I think the balance of probabilities are that this is a much longer event in terms of the economic impacts… And I think it’s going to be the largest insolvency event in all history.”
Pal believes that the incoming crisis will be so bad that it will permanently change the psyche of the next generation.
“This is a generational change… What it does is the younger generation will look upon everything differently forever.
They will look upon, with some suspicion, the pension system which is going to fail in this. They’re going to look across securities markets in ways that they will think ‘this is just not for me.’ They will have different opinions on risk and savings than previous generations.”
To illustrate how an entire generation’s attitude towards the financial system can change, Pal says to look at Millennials.
“Millennials have already been scarred by 2000 and 2008. They don’t trust the financial system… They will reject what went before them, and they will embrace things that are new and different.”
To protect himself from the aftershocks of the coronavirus pandemic, Pal reveals that he is shifting a significant portion of his wealth into Bitcoin.
“Of the liquid net cash that I have available… my allocation that I want to be in for the next 12 months probably, maybe longer, is 25% Bitcoin, 25% gold, 25% cash, and 25% trading opportunity.”
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