Is It Time To Buy??? - Part 20
Oaktree Capital's Howard Marks is concerned the rise of ETF investing is making FANG stocks investing more risky as many of these funds are using the same "momentum" factor.
Marks is known for his prescient investment memos, which warned about the financial crisis and the dot-com bubble implosion. A year ago, Howard Marks was concerned about the rise of ETF investing was making FANG stocks investing more risky as many of these funds are using the same "momentum" factor.
Now the Billionaire is talking about the US equity markets slipping below their Mark lows. But get this, because of all the discussion of whether we hit a bottom or not, Mark offers some great advice and says if you think something is cheap based on valuation and you have so much conviction, go ahead and buy it.
Mark’s advice is being echoed by some of the biggest banks on Wall Street.
JPMorgan analyst Marko Kolanovic predicts the S&P 500 will reach a new all-time high earlier next year given the buying spree by the US Feds.
Morgan Stanley analyst Mike Wilson thinks the lows of 2450 on the S&P 500 won’t get retested because of the buying spree by the US Feds and flattening of the COVID-19 curve.
Our call of the day, from a team of Goldman Sachs strategists led by David Kostin, says the worst of the market rout is behind us. A “previous near-term downside of 2000 [for the S&P 500] is no longer likely. Our year-end S&P 500 target remains 3000 (+8%),” says the team in a note to clients on Monday.
Why? “The combination of unprecedented policy support and a flattening viral curve have dramatically reduced downside risk for the U.S. economy and financial markets and lifted the S&P 500 out of bear market territory.
“If the U.S. does not experience a second surge in infections after the economy reopens, the ‘do whatever it takes’ stance of policy makers means the equity market is unlikely to make new lows,” said Kostin.
Right now the DOW is set to open about 400 points higher at 9:30 AM eastern based on an improved outlook on the containment of COVID-19. However, the World Health Organization stated this morning that we aren't out of the woods yet. For example, in the past two weeks, the number of people infected has almost doubled.
This morning WHO also said, "it is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago."
The immediate level that I'm watching this morning is the 2800-2840 level on the S&P 500 on the 4 hr chart. Should be an interesting week...stay tuned.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.