He said Chief Economist at Allianz, Mohamed El-Erian The current market rally presents an opportunity for traders to eliminate exposure to higher risk investments.
El-Erian added: “Given the market rallies well last week, I tend to use the rally to mitigate risks because I think there is a high potential for monetary policy error, and we cannot ignore what is happening,” he told CNBC, and reviewed it. Al Arabiya.net”.
He emphasized that geopolitical conflict, the Fed’s monetary policy, and inflation all combine to create uncertainty for investors, although the possibility of the Fed making a mistake is the most worrying thing.
As a result, the current landscape will favor stock pickers, according to the Allianz consultant and president of Queen’s College.
Last week, the US market achieved its best series of gains for 5 consecutive sessions since November 2020, with the S&P 500 rising 6.2% and the Nasdaq adding 8.4% to its value over the week. But some analysts agree with El-Erian that the road to ascent will be bumpy.
However, others are advising investors to do the opposite, as JPMorgan said last week that the collapse in “bubble stocks” favored by Cathy Wood is over, and now is the time to buy them.
The investment bank added that many stocks fell 80% or more and exceeded the downtrend, and it was time to start adding risk stocks.
Meanwhile, legendary investor Mark Mobius said investors should stick to stocks to guard once morest inflation while the Federal Reserve raises interest rates.
El-Erian said the general approach would be to sell aggressively amid the recent recovery.
“In general, if you have a very high exposure to risky assets, the market has given you a chance to loosen up a bit now,” El-Erian advised investors.