Due to the tremendous amount of money that high-net-worth and 401(k) investors have that needs to be put to work, the asset management industry will survive and thrive, despite the current gravitation to conservative investments amid the market turmoil.
That was the message of Norton Reamer, CEO of Asset Management Finance, speaking at the Managed Accounts Technology and Operations Summit.
However, leveraging will be tamped down, and that will stifle economic growth somewhat, Reamer said.
To be sure, we are going to have to deal with the effects of deleveraging for several years to come as the super-leveraged, pro-risk environment of the last decade is brought down to earth, Reamer said. This should dampen the growth rate in the economic recovery but it need not damped the growth rate of the markets, as high P/E ratios, connoting higher quality earnings, appear on the investment horizon.
He added: I, for one, feel that we will recapture the market losses of the last six months much more rapidly because of this quality of earnings/lower leverage combination as 2009 and 2010 unfold.