Invesco’s Kristina Hooper is anxious overzealous investors are getting swept up in market momentum.
Whether it’s optimism or pessimism, she cautions they’re ending up being dangerously overconfident about where the market is heading next.
“Individuals have become really set in their opinions. Some believe that there’s no end in sight to the stock market rally,” the firm’s chief worldwide market strategist told CNBC’s “Trading Nation” on Monday. “Others think that since we continue to strike new highs, things are getting quite frothy.”
Hooper observes that increasingly more investors, particularly on the retail side, are making dangerous one-sided bets off their polarized market views. She thinks it’s a major trap that will result in deep losses.
“There’s some speculative fervor in markets, and it’s comparable to what we have seen with bitcoin,” stated Hooper, who added it also shows comparable qualities to the enjoyment surrounding the late 1990s tech bubble.
Hooper, who supervises $1.1 trillion in possessions, views the rising appeal of no-fee online trading platforms such as Robinhood as creating more access to the marketplaces and contributing to enthusiasm amongst retail investors.
“It’s constantly terrific to see more financiers enter the marketplace,” she said. “Just ideally, we can remind them of important long-lasting investing tenets like diversity.”
Due to a lack of visibility since of the coronavirus’s supreme path and the upcoming governmental election, Hooper is recommending customers to have a 12 to 18 month time horizon and to use a barbell approach to investing. She suggests growth stocks on one end and worth on the other.
“We do not know exactly how this economic healing plays out,” Hooper stated. “The most important thing we need to be concentrated on is being well-diversified.”
On Monday, the S&P 500 struck another all-time high and closed above 3,400 for the first time . The Nasdaq likewise saw a strong efficiency. The tech-heavy index taped its 37th record close up until now this year.