Market Insight with Harvest’s Michael Kovacs

Market questions answered by the CEO of Harvest Portfolios Group, Michael Kovacs

BTV’s Taylor Thoen spoke with the CEO of Harvest Portfolios Group, Michael Kovacs to shed some light on the current market position.

How Did the Market Crash?

According to Kovacs all market crashes, whether it’s the most recent one, the financial crash of 2008, the tech wreck of 2001, all start with an underlying premise. We get what he calls a waterfall effect. This occurs when pro traders, institutional traders strictly step in and start to sell mass positions into the market or short sell big positions. In 2007, the Securities and Exchange Commission in the United States eliminated what was called the uptick rule. “And now you’ve got the selling and selling and selling, which creates this huge waterfall effect.” says, Kovacs. “So in a sense, that’s how these market corrections or proxies gather so much steam, if you will, before they start to bottom out a bit, which seems to be the process that we’re going through now.” he continues.

Are We at the Bottom?

Kovacs would like to think we are at the bottom but isn’t sure. There’s a lot of economic indicators that have come out still because the economy’s been shut down so much. “When we start to see earnings pick up and then all the analysts can get back in there, start resetting their targets then we’ll probably see the market start to rise again.”, says Kovacs.

Advice for Investors

Kovacs believes that it comes down to if you feel comfortable with what you’ve got in your portfolio. “If you like something, a fund or ETF or a stock when it was twenty-five dollars then why wouldn’t you like it even more at seventeen or twelve?”, says Kovacs.

ETF’s in this Market

Michael shares that it’s important to remember that all ETF’s are not created equally. All sectors were affected by the market sell-off. Whether it was energy, overall stocks, gold, preferred shares, bonds, everything got hit. “Good quality will rise in value over time. You just have to be patient and it can be hard during these times.”, says Kovacs.

Buy, Sell or Hold?

Kovacs says, “hold the nibble. Hold on if you don’t have any powder dry. If you do have a little bit of powder dry, nibble away, take advantage of these prices.”