What the Pros Say: Is it Time to Buy?
Global stock markets rebounded on Monday, after taking a dreadful hit last week, as the world's governments stepped up plans to bailout the financial sector and prevent the economies from tumbling into a recession.
European markets were up more than 6 percent after the UK government announced plans to recapitalize three major banks. France and Germany are expected to unveil similar bailout plans.
Have we hit a bottom, is it time to get back into stocks? Here's what our experts have to say:
We've Hit the Bottom
Bill Smith, president, CEO and senior portfolio manager at SAM Advisors, thinks the bottom is here. If you have the guts, now's the time to buy stocks like Research in Motion (RIM) and Apple .
No Guts, No Glory
Last week, "we saw panic selling, we saw forced liquidations," says Marc Pado of Cantor Fitzgerald. The company saw an opportunity and sent out an e-mail alerting the investors that the "woosh" has finally arrived. "Now is the time to be greedy," Pado says, "because everyone else is fearful." He warns there will still be a lot of losses, but there's enough of a floor below the market that there are plenty of opportunities for the strong.
Sell Into Rallies
Don't bother to wait for concrete rescue plans. Once the markets rebound, start to sell into rallies, says Benjamin Pedley, MD & investment strategist at LGT Investment Management.
Is It Time to Buy Financials?
Bill Smith, president, CEO & senior portfolio manager at SAM Advisors has started to buy bank stocks. But Benjamin Pedley, MD & investment strategist at LGT Investment Management thinks the time is still not right.
Back to Basics
Focus on defensive plays like companies in the consumer staple, utility and telco sectors, advises Clive McDonnell, regional strategist at BNP Paribas Securities.
Bailout Means Bonds Buying
World governments are going to do whatever it takes to save the banking system, and part of that is to insure a steeply sloping yield curve, leading the investor to buy short to medium government dated bonds of the highest quality, like the U.S. 2-year Treasury note, according to Robin Griffiths, technical strategist at Cazenove Capital.
"The capitulation low is virtually in place, it will be there by the end of the month, it almost certainly will be there this week," Griffiths said when looking at the Shenzhen Composite chart.
Griffiths also believes that Asian emerging markets should be the first place investors put their money before investing in Western markets.
Gold to Rally to $2,000
"Gold will be through $2,000 some time in the next 18 months, we are going to have the most almighty inflationary ramifications for what's going on because I'll bet you that the central banks don't pull back this liquidity in anything like the amount of time they should," Philip Manduca from ECU Group told CNBC.
The gold price could dip over the next three to six months, Manduca points out, but that is a buying opportunity.
Bull Market a Long Way Off
"I do not see us defining a new bull market in equity risk assets until we know exactly what this recession looks like," Tim Harris from JPMorgan Asset Management told CNBC. The underpinning is in place for the market, Harris said, but the next twelve months will prove a very bumpy ride for investors and economic weakness will remain to the next two years.