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See last week’s 2009 Outlooks – part 1 here and part 2 here.

Swiss bank Reichmuth manages the Reichmuth Matterhorn, a global FoHFs. Reichmuth was recently in the press as one of the Madoff investors who lost $325m (3.5% of the bank’s AUM of CHF 11bln).

Reichmuth’s managers issued their outlook for 2009 and the best strategies to invest in going forward.

What will 2009 bring? Interest rates will remain low in the new year. Inflation will fall, too – if only as a result of the basis effect. A significant year-on-year fall in the price of commodities (including oil) will see to this. Further bad news is on the way in 2009. Companies will cut costs, and unemployment will rise. Earnings expectations are also under pressure. Things will get especially tough for firms that have debts to refinance. Refinancing will be scarce and at best expensive. Meanwhile, mortgage rates for conservatively financed homes will be attractive in 2009. Central banks will cut rates further toward zero. Long-term yields may also fall a little further. Over the longer term, a rise in rates is to be expected.

Investment concept for 2009 The banking crisis is not over yet. This means that diversification remains paramount. Cash is king, but only from a short-term perspective. A large cash position was helpful in ......................

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