Market Likely to Pull Back This Summer, Fund Manager Says

Robert Pavlik, chief investment officer for Oaktree Asset Management, told CNBC’s “Morning Call” that he expects the market to pull back this summer.

“I think the economy is still in a mid-cycle slowdown,” Pavlik said Thursday. “We’re not coming into a recession, but (the economy) is slowing down. (The market) is going to focus on higher inflation, weaker business spending, weaker manufacturing, a weaker dollar, and higher oil prices. This is going to add up to a market that’s overbought at this level.”

He said May to October is typically a slow time for the market, and he expects that pattern to continue this year.

“I’d be very cautious about starting any new positions for the next two or three months,” Pavlik said. “I’d look for a cautious approach going forward. I’d be relatively defensive, looking at healthcare.”

He said investors might consider selling underperforming stocks because there’s no reason to believe they’d become leaders in a downbeat market.

“Sell your losers if they’re going continue to lose,” Pavlik said.