Wise to keep ‘powder dry’ in event of further downturn, emerging markets pioneer warns
Emerging-markets investing pioneer Mark Mobius made those remarks Tuesday in an interview, putting him in the investing camp that expects an inevitable cascade of brutal economic data and corporate earnings hasn’t been fully discounted by investors.
Mobius, who founded Mobius Capital Partners in 2018 after a three-decade run at Franklin Templeton Investments, said corporate earnings would be “pretty bad” and that while some bargains have emerged, investors should keep some cash ready to deploy in the event of a further market downturn.
U.S. stocks hit all-time highs in February, then plunged into a bear market as the global spread of COVID-19 forced the U.S. and countries around the world to largely lock down their economies in an effort to contain the outbreak. Stocks have taken back a large chunk of lost ground since March 23, however, with recent gains tied to expectations the pandemic is near its peak, turning attention to efforts to reopen economies.
Market bulls have argued that the unprecedented nature of the shock and the massive response from the Federal Reserve, other central banks, and governments have rendered most comparisons to past bear markets debatable.
Stocks were off early highs but remained solidly higher Tuesday, with the Dow Jones Industrial Average DJIA, +1.76% up around 350 points, or 1.5%, while the S&P 500 SPX, +2.09% advanced around 1.8%.
Others have cautioned that stocks are largely sticking to the bear market script.