Tags: Paulsen | stocks | geopolitical | news

Wells Capital's Paulsen: 'It's a Loser's Game' to Sell Stocks on Geopolitical News

By    |   Monday, 21 July 2014 12:05 PM

While military conflict rages in the Mideast and Ukraine, many stock market participants remain bullish.

"Investors are learning that it's a loser's game to sell on the news," Jim Paulsen, chief investment strategist at Wells Capital Management, tells The Wall Street Journal. Recent developments "don't give you a sense that they're going to turn into some wider conflict."

That helps explain why the Dow Jones Industrial Average hit a record high of 17,151.56 Thursday, and the S&P 500 reached an all-time peak of 1,985.59 July 3.

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Though stocks have slipped, both indices remain within 1 percent of their zeniths.

Geopolitical crises historically have had little long-term impact on stocks, according to Ned Davis Research, The Journal reports.

The firm's data show that during the past 100 years or so, while the Dow has registered a median decline of 2.9 percent on the first day after a crisis, it has then posted a 4.6 percent advance for the next month.

Joe Heider, managing principal at Rehmann Financial, agrees with Paulsen.

"We're at that phase of the bull market where greed has overcome fear," he tells The Journal. "There is the mindset that, 'I'm missing out a huge opportunity and I better jump in.'"

To be sure, former Pimco CEO Mohamed El-Erian warns that investors are overly complacent about the turmoil in Ukraine and the Mideast.

"The problem is if you step back, the process is getting worse," he tells CNBC. "It involves non-state actors, which means it's much harder to contain. Unlike the old days, there is no outside power that informs, influences or imposes outcomes."

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While military conflict rages in the Mideast and Ukraine, many stock market participants remain bullish.
Paulsen, stocks, geopolitical, news
306
2014-05-21
Monday, 21 July 2014 12:05 PM
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