Investment expert Josh Brown suggested Thursday that stocks are undergoing a bear market and that the U.S. economy is headed for recession.
Market losses Thursday, the day following a major rally, amounted to "the aftermath of yet another bear market bounce. These things are mentally debilitating for investors precisely because of how quickly they slip away," the Ritholtz Wealth Management CEO said on CNBC’s Halftime Report.
“What happened yesterday, while it was exhilarating and remarkable and a lot of fun and a lot of backslapping and a lot of rich kids who are really proud of themselves because they grew up insulated from the consequences of their own actions, the end result today is, oh wait a minute, maybe we put the financial crisis on hold but we still get to have a recession," Brown said.
“So that’s how I feel. And I don’t want to get too negative and I’m not out shorting the market, I’m not a hedge fund, but I just want to give people a really accurate picture that this feels more to me like a classic bear market than it does a correction or a dip or a quote-unquote healthy pullback," he said.
“I think you should be a buyer if you have a really long-term time horizon. You should not expect that the buys you make today will necessarily be rewarded a week from now; it’s just a different environment," Brown said.
While many reported that Wednesday rally was the S&P 500's 10th best day, the commentary missed context about the other best nine days, Brown said.
“Typically they take place in years like 1933 and 2008 and 1931 and they happen when the market is in a 75% drawdown," he explained.
On Oct. 13, 2008, the sixth best day ever, he added, "We were already down 35.9% from the high.” The rally Wednesday didn't take place in a statistical bear market, “but from my perspective close enough, horseshoes and hand grenades.”
Stephanie Link, appearing on the same CNBC panel, offered a more optimistic view of the economy.
“I'm not in the recession camp," said Hightower Advisors' chief investment strategist, citing weekly jobless claims, declining inflation and the potential for some Federal Reserve rate trimming. "I’m in the camp of slowdown. ... Now I want to hear what companies say in terms of earnings" and how stocks react.
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