Back-from-the-dead stocks show high tolerance for trouble - BNN Bloomberg

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Name all the economic rationales you want for the rebound, there’s something to be said for just having a high threshold for pain.

Name all the economic rationales you want for the rebound, there’s something to be said for just having a high threshold for pain.

About US$6 trillion has been restored to equity values so far. Could it all reverse? Yes. Big voices on Wall Street have spent the past month telling clients that the gain since mid-June is just another bear-market mirage -- that this time won’t be different for anyone holding stocks into a recession. For all the assurance, those warnings make relatively little mention of investors’ formidable capacity to live with pain over the last few years.

Nothing guarantees such demand will stay robust. JPMorgan strategists including Nikolaos Panigirtzoglou cautioned that business behavior could change if recession dynamics kick in during the second half. For now, though, corporate support has had a hand in preventing equity losses from snowballing. “Optimism has won” over the long haul, said Victoria Greene, founding partner and chief investment officer at G Squared Private Wealth. “And because that theory has never been invalidated, you are conditioned to take the pain, and that it will get better, and that the pain is temporary and that the market is going to lead us out of it.”

 

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