Investors may want to hold on tight.
National Securities’ Art Hogan warns the volatility burst will affect the market for weeks.
He cites a laundry list of risks including the uptick of coronavirus cases paired with overbought conditions.
“The fear of the unknown catches more volatility than anything,” the firm’s chief market strategist told CNBC’s “Trading Nation” on Friday. “Volatility is going to tick up a bit into summertime.”
Thursday’s downdraft contributed to the market’s biggest weekly loss since March. The Dow, S&P 500 and tech-heavy Nasdaq closed solidly higher on Friday, but it didn’t come close to making up the losses.
But Hogan, who has spent almost four decades on Wall Street, and oversees $15 billion in assets, believes it’s no reason for investors with longer-term time horizons to cash out of stocks.
“Have a plan, stick to it, and have balance in the equity portion of your portfolio,” he said. “Sticking to your plan is one of the best things you can do right now.”
His best advice is to strictly rebalance the classic 60% stock and 40% fixed income portfolios on a quarterly basis. Hogan also advocates a barbell approach to investing right now.
On one side, he recommends growth or technology names.
“You’ve got those that seem to have worked so far that have free cash flow during the work from home environment,” he said.
Hogan likes cyclical groups including financials, industrials and energy on the other side.
“That cyclical part will actually do well as the economy picks up,” Hogan said. “That balanced approach, I think, is going to be a great portfolio to have for the next 12 to 18 months.”