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Bob Doll: Investors Need Strong Stomach as Market to 'Bounce Around'

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Wednesday, 14 November 2018 09:28 AM

Investment guru Bob Doll warns the stock market will continue to remain very volatile and only investors with strong stomachs should venture into trading.

Doll recently told CNBC that he sees three major factors "haunting" the market:

  • How long earnings will stay strong.
  • Whether the Federal Reserve will tighten interest rates too aggressively.
  • The potential fallout from the U.S.-China trade war.

Doll, who is a long-term bull, contends the economic cycle is still positive for stocks. It's just a question of when Wall Street angst and volatility will subside, CNBC.com explained.

"I don't think we're going to see a new high this year," said Doll, Nuveen Asset Management's chief equity strategist and senior portfolio manager. "We're going to bounce around with a lot of side-wise volatility."

However, he is urging investors to stay in the stock market through sharp downturns like Monday’s 600-point plunge.

"You've got to have some stomach, and go buy some," Doll said. "And, when they've had their big rallies, you can let some go. It's more of a trader's market."

However, other experts are much more optimistic about the market's future despite six weeks of unusual U.S. stock market volatility.

Veteran market strategist Richard Bernstein continues to believe share prices will keep rising, even though the nine-year U.S. economic expansion has reached its late stages.

“I really don’t think there is a bear market on the horizon,” Bernstein, the chief executive of Richard Bernstein Advisors LLC and former Merrill Lynch & Co chief investment strategist, said at the Reuters Global Investment 2019 Outlook Summit in New York.

Bernstein said there is now an absence of typical catalysts for a “multi-quarter, curl-your-toes” bear market including falling corporate profits, an inverted U.S. Treasury yield curve, and overly bullish investors.

“People are so focused on downside and downside protection,” said Bernstein, whose firm oversees $9.5 billion of assets as of Sept. 30. “That’s not what a recession feels like.”

Bernstein said he is “very cyclically positioned,” favoring industrials, commodities, gold and other investments that can thrive in a rising “pro-inflation” environment, while keeping a “very, very short duration” in fixed-income investments.

“Fundamentals have been deteriorating in the fixed-income market for two years. Nobody cares. It’s an amazing thing to see,” he said. “If you think about what’s the kryptonite of fixed income, it’s inflation. (It) has been creeping up at a snail’s pace, but it’s creeping up.”

A key cause of uncertainty about growth prospects comes from Washington, Bernstein said, as lawmakers eyeing the two-year election cycle enact voter-friendly stimulus but resist the hard choices to address a longer-term need, infrastructure spending.

He said that shortcoming is already impeding productivity, pointing to the daily slog that he and thousands more commuters experience on a much-maligned suburban railroad to New York from New Jersey.

“I have the pleasure of riding New Jersey Transit every day,” he said. “I only go through a 108-year-old tunnel. I don’t get to go over the 110-year-old bridge.”

Bernstein sees no “day of reckoning” for the economy, but said a “slow

Stock markets stabilized Tuesday after a sell-off led by technology shares dragged Wall Street sharply lower the day before, the Associated Press reported.

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Investment guru Bob Doll warns the stock market will continue to remain very volatile and only investors with strong stomachs should venture into trading.
bob doll, investors, strong, stomach, market
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2018-28-14
Wednesday, 14 November 2018 09:28 AM
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