“I don’t think we are forming a bottom yet. I think we are falling at a slower rate, “said Allianz chief economic adviser on CNBC’s” Squawk Box “. “There is a very important distinction there. “
Calling a specific fund is a difficult task, said El-Erian. But he said he will feel confident that the market will start to bottom when one of two things happens.
“Either we get a very sharp fall, or we get good news from the medical side. This good news is starting to come, but has not reached critical mass, “he said.
The S&P 500 recorded its recent low of 2,191.86 on March 23, 35% less than the historic index peak in February. The Thursday’s close of 2,526.90 for the S&P 500 is 15% higher than the low on March 23.
El-Erian has repeatedly warned investors of the uncertainty surrounding the coronavirus epidemic.
In early March, former CEO of investment giant Pimco correctly predicted that sales driven by the coronavirus would remain until a bear market is reached.
A bear market is defined as a decline of at least 20% from recent 52-week highs.
El-Erian continued his calls for caution on Friday, saying “there is so much we do not know.”
Uncertainty surrounding the situation means that investors are likely to make mistakes, said El-Erian. He said investors should be wondering what mistake they can afford: being too early or too late.
“The average investor, the mistake he cannot afford, must be wiped out. Because if you are wiped out by bankruptcy, it does not come back. Bankruptcies destroy capital, “he said.
“For them, I say,” Wait a while. “Yes, you may miss the first 5%, but it’s very difficult to call,” he said. “It is a medical problem. It is not a market problem, an economic problem, a financial problem. “