In a speech delivered to a group of private investors on Feb. 15, Robert Rodriguez, managing partner and CEO of First Pacific Advisors, warned of ongoing market instability if the federal government doesn't make “credible and material fiscal reforms” by the end of 2013. In his speech, “Caution: Danger Ahead,” Rodriquez also stressed the critical importance of reforming the American tax code.
Rodriguez identified Europe, Japan and the United States as the “trio of financial misfits,” but noted how the problems at home concern him the most. He took aim at both the Republicans and Democrats for failing to get the country's fiscal policies in order:
I have been highly critical of our nation's fiscal policies and budgetary trends for years. Both political parties disgust me because of their incredible fiscal ineptitude and unwillingness to be truthful with the American people. A chaotic future will be the result if our representatives continue to fail at their fiscal restructuring responsibilities. It is easy for me to speak of Europe and Japan in cold clinical terms, but not the U.S.; this is home and our nation's fiscal mess is like a life threatening cancer that is not being treated.
Furthermore, Rodriguez told the group of private investors that “principal protection is uppermost in my mind,” and expressed his belief that many investors are underestimating the potential risk and disruptiveness from high global financial leverage. “Flexibility, high liquidity and concentrated asset deployment, when appropriate, will be key elements in attaining superior investment performance,” Rodriguez said. “The era of being fully invested and adjusting portfolio weights relative to index has been over for more than a decade.”
To read the full text of Rodriguez's speech, click
here.
