por admin » Lun Mar 23, 2020 11:30 am
El-Erian: ‘Pockets of value’ emerging in market but only for investors with high risk tolerance
PUBLISHED MON, MAR 23 20209:12 AM EDTUPDATED 2 HOURS AGO
Kevin Stankiewicz
@KEVIN_STANK
The stock market’s steep decline over the last month has now created opportunities for investors who can stomach risk, economist Mohamed El-Erian told CNBC.
“Those people who entered this defensively and have a massive appetite for volatility, there is starting to be real pockets of value,” El-Erian said.
“For most investors, I think you still want to be cautious out there,” the Allianz chief economic advisor said.
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Most investors still need to be cautious amid coronavirus-drive volatility, says Allianz’s El-Erian
The stock market’s steep decline over the last month has now created opportunities for investors who can stomach risk, economist Mohamed El-Erian said Monday.
“Those people who entered this defensively and have a massive appetite for volatility, there is starting to be real pockets of value, and they should be looking at that,” the chief economic advisor at Allianz said on CNBC’s “Squawk Box.”
But El-Erian added that “for most investors, I think you still want to be cautious out there.” That’s a theme he’s been driving home since early last month.
El-Erian’s comments Monday came before the Federal Reserve announced additional programs to help the market function more efficiently.
Stocks, however, opened lower Monday and at midmorning the Dow and S&P 500 were off more than 1%, while the Nasdaq was up slightly.
El-Erian, former CEO of investment giant Pimco, correctly predicted earlier this month that the market’s coronavirus-driven decline would bring stocks into a bear market, which is defined as 20% off their most-recent high.
He also said stocks call fall as much as 30%. As of Friday’s close, the Dow sat more than 35% off its February all-time high.
El-Erian said the companies risk-tolerant investors should be looking at are those whose businesses will actually benefit in the “post-crisis world.”
As long as those companies have strong balance sheets, the economic shock from the coronavirus should not be crippling. In fact, those companies will “come back really strong,” he said.
“That’s why I’m saying there is areas of long-term value, even now, before we turn around. But you have to have a tremendous ability to withstand volatility,” he said.
El-Erian also called on Congress to quickly pass fiscal relief measures to soften the economic blow from the coronavirus.
The latest COVID-19 relief measure failed a key procedural Senate vote on Sunday as Democrats said the massive fiscal stimulus package did not do enough to help American workers. Negotiations on the bill remain ongoing.
“People are suffering. There is real pain in the street,” El-Erian said. “This is an economic sudden stop that takes away your livelihood, that makes you feel insecure. This is a real hit and people are looking to Washington to do something.”