Bloomberg Audio Studios, podcasts, radio news. Christopher Ayleman. He's a CIO over at Colsters, overseeing more than three hundred billion dollars in assets under the portfolio. And Chris, let's start off with those rate cut expectations, because, as you know, a lot has changed over the past three or four months. When everybody thought we were getting four or five, maybe six cuts this year, the market right now only pricing in one, though the Fed still has three on its dot PT.
Well, and what man, you've got to look You hear him head back in December that we were looking for six, then three, now two and one. Market has to readjust so this has been a huge change in the shift. It's actually taken it in stride. I'm not surprised April's been so tough because strong January, February and March we're in the market. It almost got ahead of itself. So
you know, the Fed's going to be data dependent. I think we've adjusted to five percent interest rates up here and the economy is doing okay, so I bet they're going to continue to hold for a while. That's news to the market. It's got to adjust to that.
Well, what is the psychology in the market. I mean, there's been a lot of discussion here about that. Some of the sell off that we saw in April was really a lot of folks just kind of protecting their profits from the first quarter. And then of course there's a seasonal factors. If you believe in the whole, you know, selling may and go away idea that we could see maybe the price action get even worse over the next couple of months.
Well, I think you hit it on the head. Old adages still hold true. Romaine and selling may go away because the market is kind of choppy, it's gotten ahead of itself. We have to see earnings. I mean, like you said, we're waiting for Amazon in a few minutes, and the earnings have been okay but not spectacular. AI is expensive as they build it up, and so far none of us are paying a lot for it. So the revenues will come. But it's the market reassessing its expectations.
I think we're in a good place, but I think the market's going to go sideways. You can easily have a ten to thirteen percent sell off in a bowl market year, so people after be ready. This market could be choppy during the summer, we've got the election. The Fed's going to be data dependent.
Chris I asked this question on radio. Cameron Christ writes great stuff for m Live. You write to call him every day, and his first line today was one of the basic principles of successfully navigating financial markets is that you should only date, not marry, your positions. And the question I was asking is what positions should you date right now and which one should you marry?
You know, Alex, I actually heard you this morning driving and listening to the radio, and that was a very interesting discussion because I'm going to make a shout out to my wife Robin forty years this month of May. So commitment, I think you stay married, and I think I'm a long term investor, Alex. So I'm going to buy the beta of the market and hold it, and
I'm okay being married to positions. I don't necessarily believe in trading and trying to time the market, and I've learned that the hard way my set and for our fund here, we've done very well by being invested through thick and thin. Maybe you up you flow a little bit, but you diversify the portfolio. Seventy thirty you hold for the long term and you stay married to your acid allocation. Oh, don't worry about individual stocks.
Seventy thirty Okay, what happened is sixty forty or what happened to like sixty thirty ten?
Hey, sixty forty went out as interest rates went down below seven percent, down to five, down to two, down to zero. Now we're back up to five. So I think you can be a seventy thirty. And I think more people need to look at that. The baby boom has to start diverse flying their portfolio. Finally, they're all in their sixties and yet they love equities. So I think you've got to really see that fixed income has a return. But sixty forty is in the past. It's
seventy thirty. Eighty twenty is what the typical pension plan is, and then a typical endowment is ninety ten.
I'm sure, Well, let's fold in also a private capital into that. Chris, I mean, Calis, there's a US was one of the at least one of the bigger penches funds out there to kind of gravitate into the private equity space as an allocation. As a proper allocation here, and we've seen those allocations go up pretty significantly, not just at counsels, but as some of your peers as well.
What is the role of that right now, particularly given the lockouts and particularly given some of the concerns that the last vintages that we saw at least for right now haven't delivered.
Yeah, remain that market is absolutely frozen. I still think there's a place for private investments in a diversified mega and I'll call U a mega fund at three hundred billion portfolio. You know, when I got here twenty five years ago, we were in the single digits in private equity real estate. Now we're at about fifteen percent, so let's call it thirty five forty percent in private markets. And I think that's the right place for us. But
you're right, they've been very slow. Real estate's got to adjust to whatever is going on in the office market and to this new level of interest rates, and I think it is. You're starting to see some transactions, but boy, our private equity is just frozen in here. We're not having a merger Monday. I need you guys to be hitting the airwaves on Monday with merger acquisitions. Companies selling their divisions, then that market will unthaw. It's not so
much interest rates. I think it really is a hangover of the economic shutdown from the pandemic, and we just haven't seen a lot of transactions. But they'll come back, and those markets I think still offer a premium over public markets for long term institutional investors.
All Right, Chris, always great to talk to.
You have to leave it there.
Christopher Allman, the CIO over at Colter's