What do today’s markets remind you of? In an early February tweet, Christine Benz, personal finance director of Morningstar, stated:
All down markets are different and it's early days, but this market pullback sure seems more like 2000 than 2008 or any of the more recent ones. (My int'l value fund has actually gained YTD!)
— Christine Benz (@christine_benz) February 4, 2022
“All down markets are different and it’s early days, but this market pullback sure seems more like 2000 than 2008 or any of the more recent ones. (My int’l value fund has actually gained YTD!)”
The tweet turned into a string of comments from her followers.
John Stoj @StojBoj stated: “Whenever I think of how the market feels to me, I try to remind myself that my feelz were wrong in 2000 & 2008. Thankfully I was only negatively impacting my own retirement those times!”
Another user replied that it felt like “a combination of 2000 and 2008. Most early stage tech valuations are absurd by any metric (2000), and lending markets are at risk (2008). Large cap European value and growth present interesting risk-reward structure.”
Another chimed in: “I’m not there yet. There are similarities in what’s over-valued, being sold off, being bought instead. The scale seems less universal, though. In late 1999 & late 2007 I was anticipating trouble, but now… not unless the pandemic worsens. Hope I’m right, prepared to be wrong.”
Benz told ThinkAdvisor in an email: “The macroeconomic conditions are different, especially with inflation at meaningful levels for the first time in several decades. But the rotation from growth to value, and the overvaluation of growth stocks coming into this period, do remind me of what we saw in 2000.
“It’s not an equal-opportunity, ‘no stocks are safe’ sell-off like we had during the great financial crisis. Growth stocks have borne the brunt of the losses and value stocks have held up relatively better, just as they did in that early-2000s period.”
Benz’s tweet prompted us to ask other investment experts about not only whether today’s markets echo past volatility, but what investors should do. Here are responses from Gary Shilling of A. Gary Shilling & Co., Liz Ann Sonders of Charles Schwab, Jim McDonald of Northern Trust Asset Management and Stephanie Link of Hightower: