Hendry: Financials "Infected" by Bubble

Hugh Hendry, CEO, CIO, Eclectica Asset, guest hosted European Squawk Box this morning. A very informative interview with a bold discussion on what's ailing the financial sector, and where Hendry, one of the UK's top performing and most outspoken asset managers, is investing today.

"It takes 25 years to regain the highs that we saw," Hugh Hendry from Eclectica said of the "bubble" in the financial sector that has burst.
He also said it's better for 'infected' financials to go "bust."

Segment 1: http://www.cnbc.com/id/15840232?video=782713231

Segment 2: http://www.cnbc.com//id/25490573, includes CNBC Europe.

Hendry also sees few signs that the outlook is picking up for the US economy.

"I think we have to recognize the recessionary forces that are bringing to bear," Hendry told CNBC. "Don't fight that, just go with the flow of the relative momentum."

Hendry said the outlook is particularly bleak for financial and technology stocks -- the two largest components of the S&P 500 -- which he said have both seen a bubble.

"When a sector becomes infected by a bubble…what history reveals is it takes 25 years to regain the highs that we saw in real terms," he said.

 (click on image to see video)

Hendry took the view that in a sustained market downturn, successful investing requires looking for more unconventional assets such as agriculture that have the potential to outperform the market.

"I think the most important thing to know is you don’t have to short this market," Hendry said.

"If you want to stay involved the most important thing is make sure the stock you own is trending higher vis-à-vis the marketplace."

This is one of the best interviews we've seen in a long time.

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