Why This May Only Be a 'Temporary' Market Bottom

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Have we hit a bottom yet?

Kenny Polcari, senior market strategist at SlateStone Wealth, weighed in on whether or not this is the real bottom for the market.

Watch the video above for more.

Video Transcript:

Katherine Ross:
There's a lot of uncertainty in the markets, but luckily I've got Kenny Polcari, senior market strategist for SlateStone Wealth with me today. Kenny, let's start here. Have we hit a bottom? When will we hit a bottom? How are we doing here?

Kenny Polcari:
I think we've hit a temporary bottom. I don't think we've hit the bottom yet because I still think there's this wave that's coming to United States. It was expected to be here in the next two and a half weeks maybe and it won't peak probably until maybe even the second or third weekend in April, and so therefore, I still think there's room for lots of volatility. I do though, think the market had gotten into a way oversold position, and so the bounce yesterday and the bounce today. Listen, it was also assisted by the bounce in oil because if you're looking, we talk about what's happened to oil. Oil has gotten absolutely smashed since January. It's down 67% and the fact that oil really kind of to unravel two weeks ago when the Saudis and Russians couldn't come to a deal, only exacerbated not only the move lower in oil, but then that dragged equities and everything else with it.

Kenny Polcari:
What was really telling, I think what gave that sense of capitulation, is when you started to see selling across the board in every asset class, including the safety trade. So, treasury started this off, gold was selling off, equities were selling off, oil was selling off, it seemed it was getting to the point where it felt like real panic and real capitulation. And so I think at the moment we've hit a temporary bottom. I'd like to say, it is the bottom, and maybe we churn around here for awhile, but I'm not sure that that's the case because a lot's going to happen in the next month.

Katherine Ross:
So we've hit a temporary bottom. Is now the time for investors to buy or should they wait a little bit longer?

Kenny Polcari:
Well, so again, it depends. We had this conversation and I have it a lot of times with friends and clients, all that stuff. It depends on who you are and what your time frame is and what your outlook is. For instance, yesterday, on a personal note, I added to my portfolio because I found names that I liked, names that are already in my portfolio that to me, were knocking me on the head going, this doesn't get any better than this at the moment as a longterm investor. So, if you're somebody that has got 5 or 10 or 15 years, you shouldn't be concerned at all and someone like you should be contributing to your 401k, should be contributing to a savings account on a regular basis and putting that money to work. You absolutely should.

Kenny Polcari:
But if you're somebody who's 60 or 65 years old and you're really nervous, then you have to figure out what your total picture looks like and where your assets are and then how to kind of make that plan. But I would view, I'm on the side of the camp that says, yes, you should be a buyer here. Even if it goes low, it doesn't mean take all the cash you have and buy it today. It's not what I did at all. I'm kind of dipping my toes in the water and I'm waiting to see. So today the market's up. I'm sitting back not doing much, happy with the purchase I made yesterday and then we'll see what happens over the next week.

Katherine Ross:
Hey millennials, listen up. Kenny, can the-

Kenny Polcari:
Hey millennials, listen up.

Katherine Ross:
Can the global stimulus plans that we've seen really prop up the markets cushion suffering and industries or should the focus, and frankly the dollars, be going towards fighting that virus? Is that a better use of these stimulus dollars?

Kenny Polcari:
So, I think the efforts by every central bank sends one message and that's a message of support, and that should be a message of trying to calm the markets, trying to calm people down that the feds and the central banks and the governments are going to do whatever they can because we've heard that word now, that's a famous Mario [inaudible 00:03:47] comment from the financial crisis. They're all doing whatever it takes. And I think in that sense, it should send the message to the world and to investors that the governments and the central banks, they're supporting it. Now look, we've talked about this, too. Central bank monetary stimulus plans are not going to cure the virus. The virus is one issue. The fed moves are another issue just in terms of kind of calming down the hysteria around the world falling apart.

Kenny Polcari:
The banks aren't going to let that happen. The central banks are not going to let that happen. Now, from a government perspective, all this stimulus to fiscal stimulus, the plans to buy out, the plans to support industries, the plans to send cash to every American, that's happening in countries really around the world. I think all that stuff is also going to try to make people calm down. Although I'm not sure that that's actually working. And I think certainly in the United States, even though we're working hard with those kinds of plans, we haven't gotten hit with it yet. And so, I think we really have to wait until April to see how people react. I'm in the camp that let's take a deep breath. Let's just sit back. If we do what we're told and we shelter in place, then this too shall pass.

Katherine Ross:
Thank you as always for all of your insight, Kenny. I really appreciate it and I hope that you stay safe and I hope that our viewers stay safe at this point. Guys, thanks for tuning in and for more on the markets, please head on over to the street.com.

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