Money manager who predicted the dotcom crash dies at 79

BARTON BIGGS, the money manager whose attention to emerging markets during a 30-year career at Morgan Stanley made him one of the first global investment strategists, has died, according to a memo to employees from the Morgan Stanley chairman and chief executive officer, James Gorman. He was 79.

By InvestSMART · 18 Jul 2012

By InvestSMART ·
18 Jul 2012

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Biggs died on July 14, the memo obtained by Bloomberg News, said.

Jeanmarie McFadden, a spokeswoman for Morgan Stanley, confirmed the contents of the memo to employees.

Biggs predicted the bull market in US stocks that began in 1982 and warned investors away from Japanese shares in 1989 before they collapsed.

He sealed his fame telling investors to sell technology stocks as they soared in the late 1990s, a judgment dismissed by the press and other investors until the dot-com bubble burst.

After retiring from Morgan Stanley in 2003 at 70, he started Traxis Partners, a hedge fund, with two other Morgan Stanley alumni.

While he was blindsided by the credit crisis that sent the S&P 500 in 2008 to its biggest annual decline since 1937, he correctly called the bottom in US stocks in March 2009, and Traxis's flagship fund returned three times the industry average in 2009.

Biggs sold stocks at Traxis in September last year and July 2010 just before gains of more than 20 per cent in the S&P 500, adding them back as the rallies progressed.

"He has a strong constitution for standing away from the crowd," Ed Hyman, the chairman and founder of Institutional Strategy & Investment, said in a 2009 interview. Hyman, an investor in Traxis, played tennis with Biggs.

Biggs largely invented the role of chief global strategist, which he assumed at Morgan Stanley in 1985, said Stephen Roach, who joined the company as an economist in 1982 and became the chairman of Morgan Stanley Asia.

"When I joined Morgan Stanley, we were a US-centric business, and within three years, he said, 'Look, I'm going to step down as US strategist and redefine myself as a global strategist," Roach said.

"He was way ahead of the pack in discovering and committing himself personally to being one of Wall Street's first global investors and global strategists."

Bloomberg

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Frequently Asked Questions about this Article…

Who was Barton Biggs and why does his death matter to investors?

Barton Biggs was a prominent money manager and one of Wall Street’s first global investment strategists who spent about 30 years at Morgan Stanley. He died on July 14 at age 79, a fact announced in a memo from Morgan Stanley CEO James Gorman and confirmed by spokeswoman Jeanmarie McFadden. Investors remember him for his influential market calls and for helping shape global investment strategy.

What were Barton Biggs’ most notable market predictions and calls?

Biggs predicted the U.S. bull market that began in 1982, warned investors away from Japanese shares in 1989 before their collapse, and famously urged selling technology stocks in the late 1990s before the dot‑com bubble burst. He was also blindsided by the 2008 credit crisis but correctly called the market bottom in March 2009.

What role did Barton Biggs hold at Morgan Stanley and how did he change the firm’s focus?

Biggs largely invented the role of chief global strategist at Morgan Stanley, taking that title in 1985 after stepping down as U.S. strategist. He pushed the firm away from a U.S.‑centric view and was an early advocate of focusing on emerging markets and global investing.

Did Barton Biggs start his own fund after leaving Morgan Stanley?

Yes. After retiring from Morgan Stanley in 2003 at age 70, Biggs started Traxis Partners, a hedge fund, with two other former Morgan Stanley colleagues.

How did Traxis Partners perform after the 2008 financial crisis?

Although Biggs and Traxis were caught off guard by the 2008 credit crisis, he correctly called the bottom in U.S. stocks in March 2009. Traxis’s flagship fund then returned three times the industry average in 2009.

What does the article say about Biggs’ investing style and being contrarian?

Colleagues described Biggs as having a strong constitution for standing apart from the crowd. The article points to examples like his early warnings on Japanese shares, selling tech stocks before the dot‑com crash, and his disciplined selling and re‑entry of equities around the 2010 rallies.

When did Biggs make tactical moves during market rallies, according to the article?

The article notes that Biggs sold stocks at Traxis in September (the year before the article) and in July 2010 just before the S&P 500 gained more than 20 percent, and then added stocks back as those rallies progressed.

What practical lessons for everyday investors can be drawn from Barton Biggs’ career?

Based on the article, everyday investors can take away a few themes: pay attention to global and emerging‑market trends, be willing to question consensus thinking, and apply discipline in selling and re‑entering positions. Biggs’ record also shows that even experienced managers can be surprised by crises, but timely rebounds and patient positioning can produce strong recoveries.