Money manager Alan B. Lancz predicts that the 45 days will be the “most critical” as the wary economy seeks to get back to whatever will pass for “normal” in the near future.
“The next 45 days may just become the most critical period in U.S. financial history,” he wrote in a recent newsletter, MarketWatch reported.
“While on average we may face a bear market every 10 years, this one is like no other,” said the contrarian money manager, who is a disciple of famed investor Sir John Templeton.
Lancz wared that even if an economic revival is executed flawlessly, the result will be a so-called U-shaped recovery, where a rebound in business and consumer activity from pre-crisis levels will be long and slow.
“Even if we execute properly, the recovery will take time and a best-case scenario is a ‘U’ shaped recovery,” he wrote. “The much talked about ‘V’ shaped recovery is no longer in the equation because of the unprecedented combination of negatives with this crisis,” he said, referring to hope for a recovery that is sharp and fast, MarketWatch explained.
Lancz, who forged a relationship with Templeton until the investment guru’s death in 2008, is a firm believer in the contrarian investing, finding value when others see battered assets, MarketWatch said.
Back in 2007, he advised clients to sell before the market soured.
“Unfortunately, this crisis has all three parts of the past bear markets’ selloffs,” Lancz wrote. “This pandemic not only threatens America’s standard of living but also could position us as a secondary global power.”
However, the the president of Alan B. Lancz & Associates, an investment advisory firm in Toledo, Ohio, still sees opportunities in stocks like Amazon.com Inc. (AMZN), United Parcel Service Inc. (UPS), Merck & Co. Inc. (MRK), Cisco Systems Inc. (CSCO), and Abbott Laboratories (ABT).
Meanwhile, Wall Street's main indexes have rallied this month, with the S&P 500 ending Friday with its biggest two-week percentage gain since 1974 on a raft of global stimulus and hopes the virus was nearing a peak in the United States.
The Nasdaq also registered its best two weeks since 2001, powered by new record highs for Netflix Inc. and Amazon.com Inc. - deemed "stay-at-home" stocks as widespread lockdowns fueled demand for online streaming and home delivery of groceries, Reuters explained.
Still, the benchmark S&P 500 is about 15% below its all-time high and analysts have warned of a deep economic slump from the halt in business activity and millions of layoffs.
"There's an early street consensus this morning that risk has run too far, too quick," said Stephen Innes, chief global markets strategist at AxiCorp.
"With several 'stay-at-home' names trading at or near year-to-date highs, the risk for a round of profit-taking might be on the cards ahead of S&P 500 earnings reports this week."
Hopes have also risen for a gradual reopening of the economy after President Donald Trump cited signs of plateauing in the virus outbreak last week and outlined new guidelines for states to pull out of shutdowns.
But his plan was thin on details and left the decision largely up to state governors.
"The recovery will be much slower than the market is currently pricing in simply because social distancing measures can be relaxed but not removed until we have a vaccine or a very effective cure," said Andrea Cicione, head of strategy at TS Lombard in London.
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