‘You could lose everything’ investing in meme stocks: Franklin Templeton CEO

Franklin Templeton President & CEO Jenny Johnson joins 'Influencers with Andy Serwer' to discuss retail investing and her thoughts on cryptocurrencies like Bitcoin.

Video transcript

- We've seen obviously a lot of volatility, a lot of crazy new things, meme stocks, crypto. Give us your sort of 30,000 foot assessment of what's going on right now in the marketplace.

- Yeah, so you know, you have to separate sort of the noise and really kind of the fundamentals that are going on. And I think when you talk about meme stocks and I'll talk a little bit about my view on some of the crypto stuff, there's some of that that's noise and there's some of that that is absolutely disruptive. But I think just from a market standpoint, you look at it you say, all right, we've just come off of a decade where there's just been massive central banks pumping money into the system. You've had interest rates at historically low levels. They're not going to-- you can't fall off the floor. They're probably not going much lower.

So they're either going to stay there for a while or they're going to go up. Well, that means how you're positioned, you look at like, the passive bond indexes, their durations have expanded over the last 15 years. That becomes a different risk. Equity markets where [INAUDIBLE] for 50% of the return in the last 10 years. So there's a lot that have been great tailwinds for this last decade. And I can say one thing for sure, is a next decade isn't going to have the same tailwinds. And so I think there's going to be some real challenges there.

And right now, we are hearing about the kind of resurgence of the Delta virus with COVID. I think there's a lot of noise there. I think just like, you know, this is where you got to pick your spots. I think in the US where you've had 70% of the population, kind of that higher risk population all vaccinated, probably in really good shape, while people will talk about the number of COVID infections. The truth is, if you've been vaccinated, the number of people who end up being hospitalized or in deaths, I think of the 154 million people that have been vaccinated, there's been 600 deaths associated to COVID.

Listen, it's serious still, but it's not what lockdown is about. But in a market like Australia where 6% of the population has been vaccinated, India, Brazil, you're probably going to need to go back to really serious lockdowns. And so I think you have to understand actually that level of detail to understand where you want to invest. And so I think that to me, we're just a big believer in active management and I think this is an environment where that's really important.

And then to the extent on the meme stocks, look, I never like investing where there isn't fundamentals behind it. And I think the challenge with things like the meme stocks, yeah, if you time it right, you're going to do great. On the other hand, you could lose everything.