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Opinion
Mohamed A. El-Erian

‘Buy the Dip’ Is No Longer a Sure Thing for Investors

Economics, finance and related policies aren’t the main drivers of stock prices now, and the war in Ukraine offers only uncertainty.

Without a halt to the war in Ukraine, the global economy and financial markets will face more disruption.

Without a halt to the war in Ukraine, the global economy and financial markets will face more disruption.

Photographer: Spencer Platt/Getty Images 

Whether it was friends or total strangers, everyone seemed to have the same question for me on a recent trip. Is it time to buy the dip in stocks? After all, U.S. stock markets have already had a few encouraging bounces in the past two weeks of trading, though they proved both temporary and more than fully reversible.

Few have liked my answer because it contends that economics, finance and related policies have been relegated to the back seat when it comes to the drivers of price action. At this stage, their market question is closely related to a political and national security calculation associated with Russia’s invasion of Ukraine: Is there an offramp for Vladimir Putin anytime soon? If there is, the occasional bounce could translate into a sustainable longer-term rally. Absent that, more unsettling financial market volatility is in the cards.