Barton Biggs, Morgan Stanley strategist who foresaw dot-com crash, dies at 79

Barton Biggs, the former chief global strategist for Morgan Stanley, who warned three years before the crash in dot-com companies that stocks were too expensive, died July 14 at his home in Greenwich, Conn. He was 79.

Jeanmarie McFadden, a spokeswoman for Morgan Stanley, confirmed the death and said the cause was complications from a bacterial infection.

Mr. Biggs was a money manager whose attention to emerging markets during a 30-year career at Morgan Stanley made him one of the first global investment strategists.

At Morgan Stanley from 1973 to 2003, he predicted the bull market in U.S. stocks that began in 1982 and warned investors away from Japanese shares in 1989 before they collapsed. He sealed his fame by telling investors to sell technology companies as they soared in the late 1990s, a judgment dismissed by the news media and other investors until the dot-com bubble burst.

He grew increasingly bearish on U.S. stocks as the Dow Jones industrial average posted annual gains that averaged 25 percent from 1995 to 1999. In a July 1999 Bloomberg Television interview, Mr. Biggs said the U.S. stock market was “the biggest bubble in the history of the world.”

Mr. Biggs’s view proved right when the Nasdaq Composite Index tumbled 78 percent starting in March 2000.

For three years, Mr. Biggs’s reports regularly cited his bullish plumber to illustrate the conventional wisdom of common investors. In 2000, he acknowledged that he had fabricated all the quotes but the first one, “Buy the dips,” which the plumber had told him while unclogging a sink at Mr. Biggs’s Sun Valley, Idaho, vacation home in 1997.

After Bloomberg News identified the plumber, Mr. Biggs apologized and said he had used him as a literary device.

After retiring from Morgan Stanley 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-stock index in 2008 to its biggest annual decline since 1937, he correctly called the bottom in U.S. stocks in March 2009, and Traxis’s flagship fund returned three times the industry average in 2009.

Traxis sold stocks in September 2011 and July 2010 just before gains of more than 20 percent in the S&P 500, adding them back as the rallies progressed.

Barton Michael Biggs was born Nov. 26, 1932, in New York City. His father, William, held positions including chief investment officer at Bank of New York from 1931 until his death in 1974, according to his obituary in the New York Times.

In Washington, the elder Biggs renegotiated defense contracts for the government during World War II and was executive committee chairman of the Brookings Institution, the public-policy research organization.

Barton Biggs, who was given a portfolio of about 15 stocks worth about $150,000 when he turned 18, had little interest in financial matters.

After his graduation in 1955 from Yale University, he served three years with the Marine Corps and taught English at a private school. Bored and feeling left out of dinner-table conversation between his father and younger brother, Jeremy, who worked for a pension fund, Mr. Biggs chose his career in finance.

On his father’s advice, he twice read “Security Analysis,” the guide to value investing by Benjamin Graham and David Dodd first published in 1934. He enrolled in business school at New York University, graduated with distinction and went to work as an analyst at E.F. Hutton, then the most prestigious retail brokerage, in 1961 through a family connection.

Hedge funds, mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether asset prices will rise or fall, were in their infancy. Mr. Biggs helped start one of the first, Fairfield Partners, in 1965. The fund returned 133 percent over the eight years he was there, compared with 19 percent for the S&P 500. In 1973, he accepted a partnership offer from Morgan Stanley to create equity research and investment management divisions.

His marriage to Judith Anne Lund ended in divorce. Survivors include three children and nine grandchildren. A lifelong fitness buff, Mr. Biggs read stacks of reports while exercising in the Morgan Stanley gym. He climbed mountains in the 12,000- to 15,000-foot range, including Mont Blanc and the Matterhorn in the Alps and Mount Rainier in Washington State, until 2008.

Mr. Biggs, who majored in English and studied creative writing at Yale, wrote a memoir, “Hedgehogging,” published in 2006. “Wealth, War and Wisdom,” published in 2008, explored how financial markets discounted major turns of events during World War II.

— Bloomberg News

The Associated Press contributed to this report.