uploads///UBS HNI survey US stock market crash

UBS Survey Shows HNI Clients Await a Stock Market Crash

Mohit Oberoi, CFA - Author

Apr. 30 2020, Published 7:37 a.m. ET

  • A UBS survey of HNI clients revealed that most of them expect a stock market crash. They aren’t buying at these prices.
  • Some of the other fund managers like Jeffrey Gundlach and Paul Tudor Jones also expect a double bottom in US stock markets.
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UBS survey: HNI’s expect stock markets to fall

A UBS survey of HNI (high net worth individual) clients with investable assets over $1 million showed that 61% expect stocks to fall 5%–20%. Another 16% see a bear market. As a result, they aren’t buying stocks. Only 23% see a buying opportunity. In November, the UBS survey showed that most of the HNI clients surveyed expect a stock market crash.

US stock market crash

US stock markets have crashed this year. However, it has been a typical black swan event. The reason for the crash was totally unexpected. Ray Dalio of Bridgewater Associates has also been warning of a stock market correction for the last few months. Recently, Dalio shared his views on the COVID-19 US stock market crash.

Several observers have been warning that US stock markets have run ahead of their fundamentals. However, markets have been strong even as many observers advise caution. Even Berkshire Hathaway (NYSE:BRK.B) might have played it safe during the US stock market crash. The company is sitting on a record amount of cash.

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A double bottom?

Jeffrey Gundlach and Paul Tudor Jones are among the fund managers who expect that US stock markets might retest their March lows. This, in technical analysis terms, means a double bottom. During the 2008–2009 financial crisis, stock markets retested their lows before they eventually recovered. Citi hasn’t been too comfortable with the rally. Billionaire hedge fund manager David Tepper advised caution and selective stock picking.

Morgan Stanley is bullish

Meanwhile, Morgan Stanley has given a bullish call on US stock markets. Mike Wilson, Morgan Stanley’s chief equity strategist for the US, said, “We’re bullish overall, and we just think there’s more upside in potentially some of the laggard areas.”

He prefers stocks in the banking and consumer discretionary space that have fallen sharply amid the US stock market crash.

Warren Buffett might not have gone overboard with buying stocks in the first quarter. In contrast, Chris Bloomstran, the chief investment officer of Semper Augustus Investments, predicts that Buffett spent $20 billion on repurchases when US stock markets crashed in the first quarter.


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