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Stephen Isaacs: Worst Market Crisis Since Great Depression, Another 20% Lower

Submitted by Taps Coogan on the 20th of March 2020 to The Sounding Line.

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Stephen Isaacs, chairman of the investment committee at Alvine Capital Management, recently spoke to CNBC about his view that the current market selloff is now only comparable with the 1929 Crash that led to the Great Depression. He sees the S&P 500 falling another 20% before staging a counter rally.

Some excerpts from Stephen Isaacs:

“None of us know, even sort of veterans… like myself who can remember 1987 and other previous bear markets, are struggling to come to terms with something that is completely unprecedented… Unfortunately, I think this is still a very very dangerous situation. Remembering that we came into this with record levels of over-leverage, record levels of over-bought in the general risk-on markets in January, early February. So we came into this with all sort of problems hiding with the momentum of a massive bull-market, which again leaves me to feel extremely concerned that the selling at the moment is only abating temporarily and we are still looking unfortunately at a very very difficult situation…”

“I am guessing, because all of us are guessing, but the bear market that took place in 1929…, that was a 50% move in three months. At the moment, we’ve come down as much as 30% on a couple of bad days. I am afraid I still see another 20% to at least get us to some sort of level of over-soldness. That would be, on the S&P 500, sub-2000. If we can get down there, obviously the market will be very oversold and very short. That might coincide in mid to late April with some abating of the extreme lock-down in Europe and we could get something like a short covering rally…”

When serious people starting drawing comparisons to the Great Depression, it is a safe bet that we are either entering a depression, or the market is already deeply oversold. You’re guess is as good as anyone else’s at this point.

There is more to the interview so enjoy it above.

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