The worst may be very much ahead when it comes to the virus but Morgan Stanley’s chief U.S. equity strategist Mike Wilson says that for stocks and investors the worst was behind us.
The Dow Jones Industrial Average closed 1,627 points – 7.7% – higher on Monday as investors were encouraged by signs the coronavirus spread may be slowing. The S&P 500 and Nasdaq also climbed more than 7%.
Wilson said Sunday bear markets end with recessions and that stocks had reached a good entry point for investors.
“With the forced liquidation of assets in the past month largely behind us, unprecedented and unbridled monetary and fiscal intervention led by the U.S. and the most attractive valuation we have seen since 2011, we stick to our recent view that the worst is behind us for this cyclical bear market that began two years ago, not last month,” Wilson said in a note.
He added that current stock market levels would prove to be good entry points on a 6-12-month horizon.
“Bear markets end with recessions, they don’t begin with them, making the risk/reward more attractive today than it’s been in years; with the twist that the next leg of the bull market could look much different than the last and the unthinkable – inflation – begins to appear.”
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