turn back to the major indexes again, a down
day on Wall Street, the stocks and in about
in the middle of their range, but certainly right
near their lows for the year joining me now is
Sylvia Jablonski co founder and chief investment officer at defiance
. CTF. Sylvia, thanks for coming on the
show. The S and P. 500 so far
has been able to avoid a bear market or 20%
drop from its high. Do you think that can
continue? Hi, Christine? Thanks so much for
having me. I I think, look, if
if we actually dissected it's um on a broad basis
, it's in correction territory, but about half of
the names of the constituents of the S and P
. 500 are actually in bear market territory. So
, you know, 2020% drop or more? I
think it's around 25% on half of the names down
. So, um, you know, there is
certainly a risk that the broader index goes there.
Um It's it's certainly something that can happen in the
short term. I don't expect that to be how
we end the year. But I think in the
next couple of weeks we might see S. And
P. Hit bear market territory at least more of
the constituents within the S and P. Hit bear
market territory as well. I think that's a big
question that you hit on that a lot of investors
have right now, should they sell at these levels
knowing that we are down nearly 20% on the S
and P from its own recent high or should they
hang on with the expectation, the general expectation that
I'm hearing as well, that we could be higher
at least from this point toward the end of the
year, what would you recommend? I would never
recommend selling in a panic. Um Historically that has
actually never worked. So, you know, but
you have to sort of be sympathetic to the situation
of of of the investor in question. Right.
If we're talking about investors that have Fully invested in
the market, but you know, they essentially have
the cash and the resources to live on day by
day, then I would say leave your money in
the market and and and let this ride out a
little bit. Right. If you look historically,
um some of the rebounds from bear markets like these
have been to the tune of 20 Um 24 and
and even 30% 6 months after the bear market hit
. So It's it's not impossible to to see perhaps
your account, your portfolio up 20% from now.
But I don't think that that plays out for um
again, like another 6, 6-9 months at the
earliest. But in terms of, you know,
if you have to sell then then you know,
then that's sort of a difficult situation. You you
always sympathize with those investors. The third, the
third group of investors though are the investors that have
a lot of cash on the sidelines and they're not
invested, but they can invest, right? So
when you're sitting on cash and sort of porting cash
, you're locking in losses with inflation. It's a
very uncomfortable market. But markets like these provide opportunities
. I don't know if today is the bottom,
I don't know if yesterday was the bottom, but
it feels like it's pretty close. There's a lot
of data suggesting that it's pretty close. So you
know, it is a good time to also deploy
cash if you have the ability to do that,
interesting. A good time to deploy cash if you
have the opportunity To do that Sylvia, what's going
to take us higher 6-9 months from now. I
know you are bullish on the stock market, 6-9
months out. How do we get there? Yeah
, well a lot of things have to go right
. I certainly acknowledge that. So I think we
get there because inflation will start to come down.
You know, if it's not sort of this month's
read, it will be next month read, it
will certainly be the summer read. You know,
we're seeing a little bit of loosening up in,
in oil prices. Um, we're seeing the jobs
numbers sort of reduced a little bit. I mean
it's a, it's a hot labor market but you
do have, you know, slightly fewer jobs available
out there. Perhaps we see some wage growth,
um, pressure subsiding on the upside. So if
inflation cools off, you know, china reopen if
that, if that happens in june um, that's
going to be, you know, a massive benefit
to a lot of US companies that have, you
know, their plants and manufacturers and and sell products
out there. Um, Geopolitics is too unclear to
really sort of call. And I think the Fed
, you know, I think the Fed is seeing
what's happening with the market. We do have this
issue where you know, you have to rise,
raise rates to fight inflation but then the debt also
has to be serviced. So you know, if
you have this situation where inflation looks like it's coming
down, markets are completely unstable. We have issues
servicing debt. Um we're seeing, you know,
a recession then you know, you'd have to think
that perhaps the Fed would pause and I know that
that's not the message we're getting. It's very much
we're raising rates and playback inflation. But um you
know, the numbers are sort of the numbers.
So I think really inflation reignited supply chain um and
continued earnings growth would would be positive too. My
last question Sylvia, how big of a risk is
china's zero tolerance policy when it comes to covid into
the overall outlook for stocks this year knowing that it
does have a significant impact on supply chains. Yeah
, it's a it's a risk. It's a significant
risk I think, you know, Apple put some
numbers behind it. So for Apple, it's about
99 billion in revenue right. Um, these are
significant numbers. We know that it could impact Tesla
and, and some of their sales forecasts for the
year. You know, that was a company that's
looking for 50 60% growth. So, um,
and then, you know, all of the,
all of the sort of future secular, secular trends
that we're hoping, um, to to see grow
and develop whether it's ai augmented reality, you know
, gaming, electric vehicles, internet of things,
data centers, all of these things that rely on
chips and so much of that. Um, and
those are manufactured in china. So I think it's
I think it's hugely important. Alright, Sylvia Jablonski
, co founder and chief investment officer at defiance CTS --> .