Investment guru Mohamed El-Erian urges savvy investors to tweak their portfolios now as the financial danger from the pandemic is “far from over” because a debt crunch looms.
"The financial stress caused by COVID-19 is far from over," he wrote for the Financial Times.
"This time, retail investors are front and center. But it is the next stage that we should already be thinking about," he wrote.
The Bloomberg Opinion columnist and Newsmax Finance Insider said investors must adjust their portfolios while thinking about the recovery value of their assets.
El-Erian warned defaults that will "spread far beyond the most vulnerable corporate and sovereign borrowers."
"The sense that the worst did not come to pass has fed complacency among investors of all stripes," he said.
"A new generation of retail investors has emerged, helping stocks on their relentless march higher," he said.
To be sure, Wall Street surged on Tuesday, with the Dow Jones Industrial Average ending more than 2% higher as investors bought energy and materials stocks and looked beyond a recent rise in coronavirus cases.
The S&P 500 energy, materials and industrial indexes jumped more than 2%, while health , technology and consumer staples each rose more than 1%, Reuters explained.
"Today is counterintuitive. We are reading about California's economy shutting down and a record spike in cases in Florida, and yet you have energy stocks leading," said Bob Shea, chief executive officer at TrimTabs Asset Management in New York. "We're seeing a mini-rotation into value."
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