Mohamed El-Erian says this may be why investors recently stopped buying the dips

Published Mon, Sep 13 202112:19 PM EDTUpdated Mon, Sep 13 20211:04 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Mohamed El-Erian told CNBC on Monday he's noticed a change in investor behavior in recent weeks, and it's contributing to the market's September struggles. In an interview on "Squawk Box," the chief economic advisor at Allianz said investors no longer appear to be conditioned to buy the dips, which he believes has been a key factor in the market's resilience during its Covid-19 recovery. "Until very recently, the behavioral aspects of this market was buy the dips, there is no alternative and fear of missing out. Those three came together, and every single [market] fall was quickly reversed," said El-Erian, a Wall Street veteran who previously was CEO of investment giant Pimco. "There is no alternative," often abbreviated as TINA, refers to the belief that investors are buying stocks because other asset types, such as bonds, are likely to provide worse returns than equities. "Fear of missing out," or FOMO, speaks to the idea of people deciding to buy stocks because the market has been strong and they're worried about missing future gains. "What we're not seeing the last few days — this month, in fact — is that behavior," El-Erian said. "Now, part of it could be because the inflation jitters put in doubt the ability of the Fed to orderly, orderly, normalize. Part of it may be elevated prices. Part of it may be it's temporary." El-Erian said it's difficult to fully understand the reason for the attitude shift, but it's nevertheless important to recognize. "All I can tell you is you have to be a behavioral scientist because the last leg in asset prices has been really behavioral, has been people believing that if they don't buy now, they're missing out on an opportunity," he said. The Dow Jones Industrial Average and S & P 500 were higher Monday, as they indexes looked to snap a five-session losing streak . The broad S & P 500 registered Friday its worst losing streak since Feb. 22. The Nasdaq Composite was the relative laggard, trading higher by just 0.1%. The tech-heavy index is riding a three-day skid. September is a historically challenged period for Wall Street. It's the worst month, on average, for the S & P 500 since 1945 . Some market commentators, including CNBC's Jim Cramer, are worried the recent tough sledding may continue . Watch CNBC's interview with Mohamed El-Erian above.

Mohamed El-Erian

David Orrell | CNBC

Mohamed El-Erian told CNBC on Monday he's noticed a change in investor behavior in recent weeks, and it's contributing to the market's September struggles.