Just a Dip Ahead
Veteran investor and BMO's CIO Jack Ablin, discusses the recent market decline, the prospect of Fed tapering, and what he sees for the market in the next few months.
SPEAKER: Hi, my guest today is Jack Ablin. Hi Jack, and thank you so much for being with us.
JACK ABLIN: My pleasure.
SPEAKER: This market's been pretty good lately, but then on August 15, we had a 225 down day and everybody's panicking now. Is that because of tapering? Is tapering really going to happen, I mean what's your feeling on this market?
JACK ABLIN: Yeah, I think that, certainly, the beginning of the end of quantitative easing; I think a lot of investors were in denial and it could never end. My sense is that the market became untethered from fundamentals back in March. We started trading on this liquidity. So, yeah, there is a little thin air, but the good news is fundamental value is probably, 1550, 1570, so it's probably not that far below where we are now.
SPEAKER: So you're not seeing any great crash coming anytime soon.
JACK ABLIN: No, in fact I don't see a correction, perhaps. I don't see it as a deep enough downturn to warrant even taking risk off the table. That said, if you've got money on the sidelines and you're looking to put it to work, I think there are probably entry points over the next month or two.
SPEAKER: I guess if you look at it from a contrarian point of view, they've been talking about tapering for months now. It's almost like we're sort of being set up for the tapering's going to happen, so that maybe when it actually occurs, you think that might take some pressure off the market, and it will just go higher at that point.
JACK ABLIN: It could. I mean it's possible that, you know, they announced the taper, they start to taper, and the world economy doesn't fall out of bed.
SPEAKER: Right, the shock's already over.
JACK ABLIN: Right and so we could see somewhat of a relief from there, but, you know, that said, before this whole thing happened, the S&P was up damn near 20% and a lot of markets around the world lagged, so I think that is not a bad number to be able to capture for the year. When I woke up on January 1, I certainly didn't dream that we'd have 20% returns going into the third quarter.
SPEAKER:Exactly. Wish we had that crystal ball right>?
JACK ABLIN:: Yes.
SPEAKER: Well, thanks for joining me Jack and thanks for being with us on the Moneyshow.com video network.