Full Article Link: Quartz – Top Money Managers Warned of Stagflation. Then They Kept Investing. Should You?
“The reality is, money managers are paid to invest, not to sit on cash. So, of course, they’ll remain largely in the market, even if they see trouble coming. Personal cash allocations need to be based on personal risk tolerance, liquidity needs, and time horizon, not on what institutions are doing with someone else’s money. Frankly, if your manager is holding 30% in cash, I’d ask why you’re paying them.”
—Stephan Shipe, Founder of Scholar Financial Advising
Key Takeaways
- Stagflation fears are rising among professionals, with 70% of global fund managers surveyed by Bank of America predicting stagflation by Q1 2026. Yet, most managers have reduced cash holdings and remain largely invested in equities.
- Institutional investors must stay invested, even in times of uncertainty. As Stephan Shipe notes, fund managers are “paid to invest,” so they are unlikely to hold significant cash positions even if economic risks increase.
- FOMO and benchmark pressure drive behavior. Managers can’t afford to miss big market rallies, even when conditions appear volatile.
- Individual investors should not simply copy institutions’ moves. Cash allocations and portfolio positioning should reflect personal risk tolerance, liquidity needs, and time horizons, rather than institutional strategies.
- Defensive options if stagflation materializes include short-duration Treasuries, Treasury-Inflation Protected Securities (TIPS), and other defensive-minded asset classes. Diversification and portfolio resilience matter more than chasing short-term returns.