Stock markets may trade sideways for "15 years"

 

By Laurence Fletcher

LONDON (Reuters) - Stock markets may remain stagnant and trade sideways for over 15 years, according to hedge fund manager Hugh Hendry, who believes many large mutual fund firms could disappear as a result.

Hendry, partner and chief investment officer at Eclectica Asset Management, also said that poor performance from hedge funds and private equity could leave both industries as niche, little talked about asset classes in the future.

So far this month, Hendry's 146.2 million euro (122.7 million pound) Eclectica fund is up an estimated 12.2 percent, after a 49.8 percent rise in October. In the first ten months of the year the fund is up 27 percent.

"The stock market could oscillate or go sideways for a period as long as 25 years, from 10 years ago," Hendry told Reuters in an interview late on Thursday.

"We've got another 15 years of markets rising, falling and going sideways."

On Thursday the S&P 500 .SPX index fell 6.7 percent to its lowest level since 1997.

The fall, which takes the S&P to more than 52 percent below its October 2007 record high, makes the current bear market the second biggest on record, exceeded only by the 83 percent drop between 1930 and 1932, according to Stock Trader's Almanac.

Hendry said that as a result of markets making no money for investors in nominal terms, many long-only fund firms which measure their performance relative to stock market indices, rather than in absolute terms, could disappear.  Continued...