Investors stay calm
Ronald Kruszewski, CEO of Stifel, says the Fed has done well in injecting liquidity into the market.
“This decline in the market happened so fast and so suddenly and was so precipitous that many clients now are sitting there and looking at it, as they should, and saying, “Is it now down 20% from here or is the more likely upside?” And so, I think clients have been surprisingly calm. Maybe they have to be. I’m supposedly an expert, and I watched my own portfolio drop precipitously, saying “Why didn’t I sell?” But of course, I know better, and our clients know better. So, I think that, that’s been, you know, surprisingly calm. In terms of money markets and all that, look, the Fed has done a remarkable job of making sure there’s liquidity in the system. And when you look at what the Fed has done you can go back to the old adage: Don’t fight the Fed.”
A ‘rip-roaring economy’
Alli McCartney, managing director at UBS Private Wealth Management, says normalcy will return to the market eventually.
“Look, we came from a rip-roaring economy, lowest unemployment we’ve ever seen. Strong consumers, strong consumer balance sheets — we’re going to get there again, whether it’s a ‘V’ shape, a ‘W’ shape, a ‘U’ shape. When you are investing for long-term investors, that’s not really the point; trading in and out. We are waiting for [volatility] to come down. … We just cannot sustain these levels, just like we cannot sustain the panic of going to the food store and [people] hijacking toilet paper. … When we get rallies, taking a little risk off the table for those clients who either need additional liquidity or would like to buy some time. We will redeploy that and when we do, it will be largely into U.S. equities, whether we do that through the options market, ETFs or active management, which I think is going to be a new trend you will see coming forward.”
Market needs to follow through
Andrew Slimmon, managing director at Morgan Stanley Investment Management, is starting to see signs of a bottom.
“You need to see multiple good days of performance. … In the last couple weeks we’ve had days of very good bounces but then there’s been no follow through. So, what we really wanted to see is a follow-through day like today coming on the heels. That’s a good sign. There’s one thing that I would point out that is occurring, which is, there is a leadership rotation occurring over the last five years, just buying low [volatile] stocks has worked really well. Since early March, as the market has dropped, that hasn’t outperformed. What is starting to outperform is actually more the cyclical stocks. That is a good sign of a bottom, when you get a leadership rotation. But I really think you need to see a couple good days to think we’ve put in a bottom here in the market on Monday. If in fact, we could reopen the economy then as it pertains to the market, the low is in. I mean, I always remind people that the worst time to invest is when things are great and they go to less great and the best time to invest is when things go from horrible to less horrible.”
Don’t buy the dips
Jeff Krumpelman, chief investment strategist of Mariner Wealth Investors, says it is still too early to buy in on all the dips.
“While the technicals within stock land have looked pretty good the past couple days it’s been refreshing to see high beta outperform low beta, and to see small caps do very well. And we do see sectors that we think are particularly attractive, yet I think it’s too early to just say, ‘Hey, buy on the dips, this is all done, it’s nothing but up from here.’ After we’ve had this euphoria from the policy announcement that seems to be in play, we’re still going to meet this second quarter rough patch in the economy. And it’s one thing to see it coming, it’s another thing to actually read it in the papers every day. And then I think the coronavirus news, are we really bending the curve? That will be very important in the coming weeks here, so we’re upgrading, we’re holding our ground, but we’re not aggressive buyers.”
Market value still out there
Jason Brady, CEO of Thornburg Investment Management, says there is still value to be found despite market uncertainties.
“It’s too early to call it as a ‘Hey, it’s an all-clear signal.’ Look, I actually think at this point there are lots of opportunities out there. You know, I think we’re seeing a margin of safety in certain prices that gives you some faith that you’re going to get payback over a long period of time. … I’m not an epidemiologist. I keep looking at the news just like everybody else. I don’t think you’re going to get one signal that’s all clear. It’s not — don’t try to pick the bottom. I’ve bought the bottom before, but I’ve never just bought the bottom. So, just try to find value. There is value out there for sure.”