Retail investors feeling bruised amid current market volatility are not alone. At best, the markets are uncertain; at worst, they are broken, according to panelists in a Wednesday session in the SkyBridge Alternatives (SALT) Conference in Las Vegas.
Worries about China, central bank policy and fixed income were all addressed by a panel featuring Leon Cooperman of Omega Advisors, Kyle Bass of Hayman Capital, Paul Brewer of Rubicon Fund Management and Kenneth Tropin of Graham Capital Management.
Investors aren't spooked but they aren't confident, Tropin said, noting an uncertain market and a "boring" cycle in which people are waiting for information following years of accommodative monetary policy.
"It's easy to maintain conviction. It's how do you maintain investors?" Bass said.
Earlier in the presentation, Bass said hedge fund fees should have stronger correlation to the risk-free rate, which would result in a lower fee structure. In terms of his own fund, Bass exited his risk positions last year in a process he said took longer than it should have due to bond market liquidity. He maintains a short China thesis, saying its credit bubble is showing the same pace and trajectory of the housing bubble, which spurred the Great Recession of 2008-09.
Cooperman said markets are "broken" partly due to increased regulation and drying liquidity. However, he still sees spots for growth in equities markets and named two long ideas: First Data (FDC), a credit card processing company, and Tetragon Financial (TFG). The latter is a closed-ended investment company based in the Netherlands. Among the reasons to invest, Cooperman said the "ace in the hole" was that the firm's principals have options expiring soon and the likelihood of the stakeholders letting the options become worthless is low.
While Cooperman maintains a cautiously optimistic view on equity markets, he is staying far from fixed income. To invest in them now, he said, would be like seeing a rattlesnake curled up in a corner and poking it. Not a winning proposition.
Cooperman's solution: "Light a candle and pray for a positive outcome."