Original title: bank of America warns: the mentality of "buying on a bargain" poses a greater danger for US stocks.
Us stocks plunged overnight, with the Nasdaq recording its biggest drop since March, followed by JPMorgan Chase & CoWall Street institutions, including Wall Street, said that every decline was a bargain-hunting time. However, Bank of America CorporationHowever, it warned that investors should remain vigilant and that a "bargain-hunting" mentality could put US stocks in an even more dangerous position.
Although the S & P 500 managed to hold its recent bottom in a new sell-off last night, Bank of America Corporation urged investors to remain vigilant.
After the benchmark US stock index plummeted on Sept. 20, it rebounded quickly last week, which is very similar to the performance of the index earlier this year. In terms of data, there have been 11 times this year when the S & P 500 rebounded quickly after a sharp fall (what BofA calls the 2 sigma event), an average of just 4.6 days, the fastest since BofA began counting in 1928.
This makes many people hold the view that 2021 is the best year for bargain buying. However, in the view of Gonzalo Assis (Gonzalo Asis) and Benjamin Bowler (Benjamin Bowler), strategists of Bank of America Corporation, this is actually evidence of market fragility.
They warn that the widespread "bargain-hunting" mentality of investors has created hidden dangers for bigger troubles, especially as the Fed plans to cut back on bond purchases and the COVID-19 epidemic continues to spread.
"investors' moral hazard and 'can't lose' attitude will only increase the risk of a bigger shock before the end of the year," BofA analysts wrote in a client note on Tuesday. The Fed is about to scale back its bond purchases and generally takes a hard line and no longer implements the stimulus measures triggered by the COVID-19 epidemic, which adds further uncertainty to the outlook. "
Morgan StanleyStrategists take a similar view, urging investors to remain vigilant.
By Tuesday's close, the s & p 500 was down 3.7% in September, on track to be the worst month in a year.