Bear Market Coming: Analyst
This $240-billion investment officer is predicting that technology stocks are poised to enter a bear market, with the NASDAQ Composite Index set to plummet further in 2016.
Scott Minerd, chief investment officer for Guggenheim Partners LLC, says the NASDAQ Composite Index could crash this year, dropping another 13% to below 3,800, as investors stay on the sidelines and flee into relative safe assets, such as bonds and Treasuries. If Minerd’s view comes to fruition, the technology stock index would officially enter a bear market.
“The market sentiment is so bad,” Minerd said. “The market is repricing to absorb and reflect the uncertainty around earnings and the economy going forward. (Source: “Guggenheim’s $240 Billion Man Says Nasdaq to Tumble Below 3,800,” Bloomberg, February 8, 2016.)
Minerd, who manages about $240 billion, has a whack of predictions that investors may want to pay attention to.
He predicted last month that the S&P 500 index would decline to 1,650 this quarter and that oil prices could fall even further, bottoming at about $25.00 per barrel before rebounding. (Source: Ibid.) He still maintains his oil prediction despite the slight rebound in prices. The S&P 500 has dropped about eight percent this year and oil is sitting at $33.53 on intraday Monday.
Minerd also predicts a coming bear market, much like the ones of 1987 and 1998.
NASDAQ growth stocks have taken a beating in the markets as of late. Growth stocks such as Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX) were among the top stock performers on the S&P 500 index last year, but are getting hammered this year due to their high price-to-earnings (P/E) ratios and about concerns of a slowing economy. Shares of Amazon and Netflix are down 29% and 28%, respectively, for the year.
The tech-heavy NASDAQ index is closed at 4,363 on Friday, its lowest level since October 2014 and 16% from its all-time high reached last July.