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A $2.8 trillion investment chief at Bank of America reveals the worrying trend he thinks will define investing for the next 20 years — and explains how traders can still crush the market

A $2.8 trillion investment chief at Bank of America reveals the worrying trend he thinks will define investing for the next 20 years — and explains how traders can still crush the market

The record-breaking debt burden of American households is the core of what will be the biggest investing dynamic over the next 20 years, according to Chris Hyzy, the chief investment officer at Bank of America Global Wealth and Investment Management. Hyzy, who oversees assets worth $2.8 trillion that role, explained at a media briefing how…


  • The record-breaking debt burden of American households is the core of what will be the biggest investing dynamic over the next 20 years, according to Chris Hyzy, the chief investment officer at Bank of America Global Wealth and Investment Management.
  • Hyzy, who oversees assets worth $2.8 trillion that role, explained at a media briefing how investors can reduce their liabilities and increase their assets even when markets are volatile.

Chris Hyzy has seen many industry changes in the nearly three decades since he first joined Merrill Lynch as an equity analyst.

Hyzy, now the chief investment officer at Bank of America Global Wealth and Investment Management, has a handy list of the most powerful ones he thinks will shape the investing landscape for the next few decades. They include the boom ofmillennials as an investing force, the concurrent mass retirement of baby boomers, and the rise of women’s buying power.

But the biggest trend he sees is the debt burden that American households carry relative to the assets they own. Put simply, “people are asset-light and they’re liability-heavy,” Hyzy said at a press briefing on Thursday.

In fact, the levels of debt are so eye-popping that Hyzy — who oversees $2.8 trillion in assets — said a rise in delinquencies and defaults will be one of the major indicators that thebull market is ending.

The good news is that anyone who owns or manages financial assets can still flip the “asset-light, liability-heavy” dynamic on its head.

But it would require a change of habits. Right now, the gold standard for asset managers is outperformance, or the degree to which an investor’s portfolio bests its target benchmark. According to Hyzy, if investors are to earn any respectable returns moving forward, the short-term obsession with how much a portfolio trounced the S&P 500 or another index in a given year has to end.

“You have to put together a consistent investment process: A goals-based framework where you create consistency of returns, not necessarily creating the best returns, because the best returns are going to be more volatile from one year to the next,” he said.

Read more:The chairman of a $275 billion dynasty unveils what he calls the best investment opportunity of the past 25 years — and explains how you can get in on the action

His additional word to the wise is to minimize the “tracking error” that investors introduce when they make rash decisions that stray from their goals during episodes of market volatility.

“If you change that anchor portfolio from one year to the next, or two or three or four years to the next, what you’re doing is you’re not only adjusting your risk profile based upon what the markets are telling you to do, you’re taking away your ability to create a more consistent return,” Hyzy said.

By making subtle adjustments, investors can take advantage of lengthy economic cycles. The ongoing bull market in stocks is the longest ever, while the ongoing economic expansion is set to shatter its previous record in July.

Hyzy expects such lengthy cycles to become the norm and favor investors who don’t make big decisions every time there’s a spike in volatility. After all, this nearly 10-year-long bull market in stocks has proven that not every slump in markets is a sign of the next big financial crisis.

Another way to benefit from this new dynamic Hyzy foresees is by diversifying through alternative assets like real estate and private equities.

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