Need to Know: This portfolio manager draws on 2008 lessons to find stocks that will outlast a pandemic
Clearly a $2 trillion U.S. stimulus package was good news for markets and hopefully the economy, but that was yesterday.
A two-day winning streak for Wall Street and other global markets is grinding to a halt on Thursday, ahead of data that could show millions of Americans filed for unemployment aid due to coronavirus furloughs and layoffs.
“The U.S. is still early on in the infection curve, and the recent rally in risk sentiment is at odds with this outlook. Markets will not stabilize without the spread of the pandemic slowing with an eye to lockdowns being lifted,” points out Eleanor Creagh, Australian market strategist at Saxo Bank. In other words, don’t look for more rallies until this outbreak is under control.
Our call of the day comes from a portfolio manager who draws on what he learned from the 2008 financial crisis to navigate tricky equity markets:
“Don’t try to call the bottom, but continue to nibble at very good companies with extremely good long-term prospects that will be OK,” advises Sam Hendel, president and portfolio manager at Levin Easterly Capital, which has $5 billion under management. He worked at a hedge fund firm during the financial crisis, but said Levin Easterly managed to perform in line with its benchmarks — S&P
Hendel told MarketWatch that his firm has been extremely active in the past few weeks, picking through market dislocations to find beaten-down, decent companies that will answer to what consumers will need in the months ahead — food, broadband and medical equipment. “We’re trying to play defense and find defensive names that have offensive elements,” he said.
The weekly number of Americans applying for unemployment benefits due to the coronavirus outbreak could come in at a record 2.5 to 3.5 million when numbers are released ahead of Wall Street’s open. Fourth-quarter gross domestic product and advance trade in goods are also coming.
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