The 2020 IA25: Mohamed El-Erian
Allianz’s chief economic advisor explains how to handle the "fire hose of information" during the COVID-19 crisis.
Mohamed El-Erian is Allianz’s chief economic advisor, president-elect of Queens’ College at Cambridge University and author of “When Markets Collide.” He has over 290,000 Twitter followers and often appears on CNBC.
Top advice
Maintain a high flow of information and deliver the key insights with the humility that the current uncertainty warrants:
At a time when all of us have been yanked out of our comfort zones in a sudden and violent fashion, it is only natural for many investors to feel unsettled and uncertain.
Advisors should respond by engaging their clients on a higher frequency basis with a view to helping them to better understand recent developments and to derive different scenarios for an inherently uncertain future.
By doing so, advisors will help both keep their clients informed and minimize the probability of big investing mistakes.
Biggest Challenge
Trying to absorb all the information coming in, distill the key insights and turn them into actionable themes.
For many investors, me included, the last few weeks have been like drinking not from one fire hose but from three of them — the coronavirus news, the policy responses and the market technicals.
The key challenge has been not to be overwhelmed by this flood but, rather, work hard to distinguish signals from noise.
What follows thereafter is a set of actionable themes that can be applied to updating forward-looking scenarios and, as importantly, identifying the areas where major uncertainties remain.