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Misbehaving Markets

Brad Tank MBA’82 predicts what the stock market and economy will do in 2023.

Brad Tank MBA’82 makes his living anticipating and predicting the future. A product of UW–Madison’s famous Applied Securities Analysis Program (ASAP), Tank works in finance: he’s the chief investment officer and managing director of the private investment firm Neuberger Berman. An expert in macroeconomics and monetary policy, he has spent the last four decades helping grow the value of firms such as Salomon Brothers and Strong Capital Management, and now he helps Neuberger Berman grow its bond business.

Tank has devoted his career to learning how markets behave “or misbehave,” he says. “It’s something we do all the time. As a firm, we go through an exercise every year. We do 10 themes for 2023, and our main theme is what we are experiencing here in this year, to some degree, is very much a precursor of what to expect in the years to come.”

Tonight on The UW Now I’ll Discuss:

Inflation is not a simple supply-chain problem. This is not a simple cyclical phenomenon. We are back to having higher [interest] rates and higher levels of inflation, and it’s with us for the foreseeable future. It’s not going to be over in a year or two. We said the same thing a year ago. We were “out there” a year ago. We continue to say the same thing today, even though it’s more of a consensus view.

The Main Point I Want People to Remember Is:

[The current economic change is] a good thing. The really strange phenomenon — and not-good thing — is the dozen years or so that followed the financial crisis, from roughly 2010 through last year, where [interest] rates were low, inflation was nonexistent, central banks engaged in a lot of unconventional monetary policy. Our view is that that’s over. We’re not going back to the inflationary ’70s. Inflation is not going to be the major problem that it was then. It’s more like the ’90s, maybe the first half of the 2000s. And that’s a good thing. We’ve had a huge adjustment in valuation of stocks and bonds, but when you have that, the prospective returns are better. It’s an opportunity. It’s a good thing.

To Get Smart Fast, Read:

Professional investors all spend time with what I would call popular financial media, and the best are tried and true. They’ve been around forever. And frankly, anybody — even if they have a financial adviser — really needs to spend time with most, if not all, of those. And then, depending on if people work with a financial adviser at a Morgan Stanley, or if they’re a bit of do-it-their-self-er with a Fidelity or a Schwab, those organizations all provide a lot of terrific research and information as well.

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