Markets to Stay Volatile But Offer Opportunity: El-Erian

Fighting in the Middle East, the disaster in Japan and turmoil elsewhere around the globe will provide more volatile days in the stock market—and opportunity for investors, Pimco's Mohamed El-Erian told CNBC.

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Triple-digit moves up and down, as have been seen in several recent trading sessions, will become the norm as the geopolitical crises play themselves out, said El-Erian, who is CEO at the firm that runs the largest bond fund in the world.

"What we have ahead of us is a very volatile environment where this tug-of-war is going to play out, and we're going to see lots of triple-digit days both up and down as we've been seeing the last few days," he said.

Stocks have fallen about 3.5 percent since an earthquake and tsunami that struck Japan and violence in the Middle East have combined to shake the market from its two-month rally. But rallies on Friday and especially the surge on Mondayhelped cut into what were steeper losses.

Investors should keep in mind that even though the events have been unnerving, there are areas of safety for money.

"I would look for countries that are benefiting, ironically, from all this," El-Erian said. "They tend to be oil exporters, commodity exporters and on the other hand they tend to live in quite neighborhoods."

Those he cited included Brazil and other Latin American nations as well as some countries in Asia. Japan even presents some opportunity, particularly if its reconstruction program gets into gear.

"It depends on how quickly and how effectively their reconstruction program is going to be," he said. "So I would wait for more evidence. This is more complicated than what they dealt with in 1995 (after the Kobe earthquake) and it's going to take some time to have clarity as to whether they can get reconstruction done quickly, which is key for the stock market."

Elsewhere, El-Erian predicted China's economy would slow down but for a "soft landing" rather than anything drastic.

He also reiterated Pimco's position that it would not be holding Treasurysuntil rates "adjust to the new reality."