Allianz Chief Economic Adviser Mohamed El-Erian is wary of the current investing climate because of what he calls "unhinged markets" in three areas: commodities, emerging markets currencies and high-yield bonds.
"Markets overshoot on the way up and markets overshoot on the way down," El-Erian told CNBC.
"That's our reality. And it gets worse at year-end because people want protect their balance sheets," he said.
Meanwhile, he urged investors to keep an eye on global central banks.
"Central banks are no longer on the same side," El-Erian said. "The Fed is going to be easing its foot off the stimulus accelerator [while] the ECB, the Bank of Japan, and the People's Bank of China are going to be pressing harder on the stimulus accelerator," he said.
He also warned that times are changing when it comes to monetary policy.
"Central banks delivered the three things that investors like most: high returns, low volatility and favorable correlations," he said.
"[But] now that central bank effectiveness is in doubt, all three are moving," he said. "That's where the tactical opportunities come. But you have to be really, really nimble in this environment."
And other experts warned that market volatility may be here to stay, at least until there is some clarification on the Federal Reserve’s rate-hike plans, even though it now seems all but certain that the Fed will finally raise interest rates next week.
“The Hamlet-esque to hike or not to hike debate has been a considerable source of market angst all year. But hopefully for not much longer,” CNN Money
“Still, investors always find a new obsession. Concerns about when the Fed will raise rates have been replaced by questions about, to use a Led Zeppelin-ism, how many more times the Fed will hike in 2016,” it said.
"There has been a shift from "Will the Fed raise rates?' to 'When's the next one and how big will they be?'" Jeffrey Kleintop, chief global investment strategist with Charles Schwab, told CNN Money.
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