As markets swoon and listed companies withdraw their guidance leaving many investors in the dark, many have chosen to sit on the sidelines. UBS Switzerland AG estimates US$4.7 trillion of investor cash is lying dormant, rising by more than US$1 trillion in the space of eight weeks.
But markets have staged a bit of a come back after plummeting. After declines of 8.4 per cent in February and 11.1 per cent in March, the S&P 500 rebounded 12.7 per cent in April. The S&P/TSX Composite Index has also staged a smart 36 per cent rally from its March low.“Get off the sidelines, and be selective. Waiting for absolute clarity before deploying cash can leave you on the sidelines for a prolonged period,” Haefele wrote in a note.
BMO Capital Markets’ Brian Belski is more bullish, noting that the worst is over for the S&P 500 and is sticking with his call that stocks bottomed on March 23, 2020, noting that investors should not be surprised if stocks ultimately rally 40-50 per cent from those lows. “Although companies aren’t providing much official guidance,their commentary suggests investors need to prepare for a long, slow and uneven recovery, a path that isn’t currently priced into the stock market.”Was this newsletter forwarded to you? Sign up here to get it delivered to your inbox.CRACKPOT CONSPIRACIES: Technicians repair a cell tower after a fire that police are calling suspicious, Monday May 4, 2020, in Piedmont, Que.