The volatility that has prevailed in the markets for weeks has prompted some investors to ask: “Is this the bottom?”, but it seems that waiting for this market drop may be out of reach.
“There is no bottom,” said Chris Heese, chief investment officer at Merrill and Bank of America Private Bank. We are in the midst of a landing“.
Hezy added that this may be resolved over time.
In addition, two catalytic factors may help transform investor sentiment for the better. The first is that inflation is at its peak, according to a CNBC report seen by Al Arabiya.net.
“We expect that to happen within the next couple of months, and the other will be strong earnings as we approach 2023,” Heese said.
“If these two things come together, investor psychology will improve within the next 12 to 18 months,” Heese said.
Friday’s inflation data indicated that price increases may slow, helping stocks rally and setting the Dow Jones Industrial Average to a possible break for eight straight weeks of losses.
One of the reasons this bout of volatility has worried market analysts is that both stocks and bonds have seen higher-than-normal gains. Heese noted that the volatility of bonds and stocks had not been closely correlated since 1994.
“This is new to a diverse group of new investors, and this is a story the most experienced investor would not want to see again,” Hezzy explained.
For investors and advisors, the present moment presents an opportunity to re-examine goals and objectives.
“If your time horizon is at least three years from now, the final process we expect to happen in the coming months is an opportunity to rebalance in the summer.”
Investors with shorter time horizons should reconsider their goals.