This article is based on a presentation from John Mauldin’s 2020 Virtual Strategic Investment Conference, which is being held from May 11 to 21. To register for this conference, click here. The Strategic Investment Conference was just approved by CIMA and CFP for 14 hours of continuing education credits.

An economic recovery should start next year, but there will be trouble later in the decade, says the well-known economist Anatole Kaletsky. In the short term, investors should gird for disappointing equity returns.

Kaletsky told the audience on Wednesday at John Mauldin’s 2020 Virtual Strategic Investment Conference that he was not there to make a case for or against lockdowns to prevent the spread of COVID-19. He was not going to focus on what would be good for health, economies or political systems during this time of unprecedented events.

His focus, he said, was to present his view on how investors can make money during the pandemic and its aftermath, or “perhaps more realistically, how we can avoid losing too much money as a result of what’s going on.”

Kaletsky, founding partner and chief economist of Gavekal Research, known around the world for its insight on global macroeconomics, financial markets and asset allocation, presented a framework for how investors should look at the financial markets over the short, medium and long term. He was part of a panel that included his Gavekal partners Charles Gave, the firm’s chairman, and Louis-Vincent Gave, CEO.

“In the short term, I think we've got to be very cautious and actually downright bearish and move to more risk-off positions, especially after the very strong rebound that has occurred since the end of March,” Kaletsky said. “And today in the medium term, I think there are reasons to be very bullish about risk assets. And I believe that sometime in the next one to three years, we are going to see another very strong period of risk-on, price gains for equities, for credit, for property … I think the long-term consequences of what's going to happen to the structure of the world economy, to the structure of business sectors, and to the balance between government and business all over the world is also going to give cause for caution, and perhaps downright bearishness.”