Highland Capital Management is an alternative investment management firm that manages various hedge funds, structured investment funds and distressed investment funds. They are located in Dallas, Texas and are a highly respected management firm in the equity markets. This is why there was a lot of attention focused on the most recent issue of Forbes Magazine. In it, Highland’s co- founder, and CEO, Jim Dondero wrote a contrarian article on how 2016 could be an exciting and profitable year for those investors that were paying attention. To prove his point, he has drastically altered Highland Capital Management ‘s financial strategy by moving it out of an all cash position and into a fully invested position in U.S stocks and actively managed U.S. stock funds. You can watch Jim and the Highland team ring the closing bell at the NYSE.
This position was completely different than the position that Jim took last year. In the first half of 2015, he observed that most investors seemed to be focused more on a fundamentalist strategy in the equity markets. Everyone seemed to be quite happy with the way things were going until the market took an about face in the last quarter of 2015. There still seemed to be enough optimism available to sustain more growth but this optimism appeared to have quickly eroded. This erosion seemed to be driven by several factors including the global decline in the price of oil and the about-face of the European and Chinese economic engines.
As 2016 dawned and oil continued its unparalleled decline, fear increasingly took over the capital markets driving prices even lower. All this, of course, has done nothing but yield more and more uncertainty in the U.S. Stock markets. In addition, analysts and other “experts” seem to see little to get excited about this year other than more of the same along with just a dash of conservative optimism. This is, however, where Jim’s article veers into new territory. He points out that historically the stock market is now in a most favorable position to potentially produce more than just small returns and potentially give investors some very good gains from a pendulum counter move in equities.