No Incentive To Buy Stocks: Strategist
A market bottom is nowhere in sight and safety of investment still beats quality as a choice for investors, as markets remain extremely volatile, Nick Parsons, head of strategy at nabCapital Markets told CNBC.
"It's hard to see the bottom from here," Parsons said, as Citigroup's share price fell below $1 and heavyweights General Motors and General Electric (CNBC's parent company) was dragged sharply lower. "It's hard to see quality as a defensive play right now."
"There's nothing wrong with making zero on your money when prices are falling. You're hero with zero right now," he added.
General Motor's shares are now less that what it would cost to buy a gallon of gas ($4), and Citigroup's share price has fallen below $1, making it more expensive to withdraw money from one of the bank's ATM than to own one of its shares.
"With some of these zombie-like companies, the living dead as it were, on government support, are they still going to be maintained in the index and as long as they are, then are investors willing to buy a zombie index? I think it is very doubtful that investors are going to return in droves at anytime soon," Parsons said on "Worldwide Exchange".
"The thing we need here is time. Time is a great healer and we often find at market bottoms we get this sense of panic and capitulation," he added.
Investors should stop buying stocks as they keep going down, and looking for the big turnaround in the markets so far has resulted in big losses, according to Parsons, who expects another round of corporate earnings downgrades and corporate bankruptcies.
"My fear here is that we don't get that sense of panic and capitulation. We just get now a rather dull acceptance that this is where we're going to be and this is where we're going to be for some time," he said.
"So unless we start to see another round of investors saying 'look, I'm giving up in this, let me get out of the exits, sell at any price.' Unless we see that, then we're probably just going to carry on grinding lower because there's simply no incentive to buy," Parsons added.