VENICE, Fla., April 7, 2020 /PRNewswire/ -- An overwhelming
majority of financial advisors believe that the stock market
declines have yet to reach a bottom, according to a poll of U.S.
advisors conducted by Ned Davis Research (NDR).1 81% of
advisors said stocks will go lower than when the S&P 500 hit
2,237 points on March 23, -34% down
from its peak on February 19,
2020.
Of those surveyed, over half expect a new low to be made by
May 31, 2020, with one-in-four
anticipating the market to bottom at a later date. Only 19% of
advisors believe the low had been made by March 23rd. The pessimism in the
financial advisor community aligns with NDR's perspective that
stocks are likely to see more volatility until they reach their
bottom.
According to Ed Clissold, Chief
U.S. Strategist at Ned Davis Research, there are four stages to the
bottoming process: 1) oversold 2) rally 3) retest, and 4) breadth
thrust. The three-day rally following March
23 likely signaled the end to a waterfall decline, meaning
that the market advanced to Stage 2. The market can bounce between
Stage 2 and 3 several times, until it sees a successful retest with
less total volume, less downside volume, fewer stocks making new
lows, and fewer stocks below their moving averages.
"The volatility we've seen over the past few weeks will make it
into history books, but it's likely we haven't seen the end of it,"
said Ed Clissold. "We'll remain
cautious on U.S. equities until breadth thrusts indicate that the
market is recovering."
Pessimism among financial advisors could be driven by their
outlook on the limitations of fiscal policy; 75% believe the fiscal
stimulus will only ease some of the damage done to the U.S.
economy. A small minority, 7%, believe stimulus won't have any
positive impact or could lead to negative outcomes, such as
inflation.
Alejandra Grindal, Senior
International Economist at Ned Davis Research said, "The U.S.
government's fiscal response is tailored to this specific crisis,
with a greater emphasis on loan guarantees and unemployment support
that reflects the extreme drop in economic activity. However, it
will take some time to implement and we may need more stimulus down
the road."
Brian Sanborn, Senior Vice
President of Wealth Management Solutions at Ned Davis Research,
adds: "Given the continued uncertainty, it's no surprise that
advisors are cautious about deploying their clients' assets back
into stocks. Until the dust settles, we are likely to see greater
allocations to cash and less risky assets."
The poll was conducted on March 26,
2020 with over 750 U.S. financial advisors.
About Ned Davis Research (NDR)
See the Signals. Avoid
Mistakes.™
NDR uses the weight of the evidence and a 360-degree approach to
build up to market insights. When we say "evidence," we mean
processing millions of data series to fuel a historical
perspective, building proprietary indicators and models, and
calming investors in a world full of bull/bear news hype and
hysteria. We believe that no client is too big or too small to
benefit from NDR's insights.
In 1980, Ned Davis founded a new
investment research group based on his fundamental belief that
making money is more important than being right. Today, we are
widely recognized for concise commentary and unbiased views. NDR is
headquartered in Venice, Florida,
with offices in New York,
Atlanta, Boston, San
Francisco, London and
Hong Kong.
Media Contact: Hod Klein, Ned Davis
Research, hod.klein@euromoneyplc.com
1 Over 750 U.S. financial advisors were polled
online by Ned Davis Research on March 26,
2020.
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SOURCE Ned Davis Research (NDR)