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Buying a dip or time to sell stocks? Here’s what Wall Street experts are saying
With the recent carnage on Wall Street, CNBC Pro is asking strategists and investors what’s next for stocks and where they see pockets of opportunity in the weeks ahead. US stocks fell briefly in the bear market on Friday, as the broad-based S&P 500 fell as much as 20.9% from its record high in January at some point in intra-day trading, before closing slightly higher. Nevertheless, the index posted its seventh consecutive week of losses, the longest decline since March 2001[ads1], as investors continue to be whipped by recession fears, inflation concerns and expectations of an aggressive rate hike cycle. However, some market participants believe that there are still opportunities for investors to selectively buy dip. “The recent downgrade of stock multiples due to higher real interest rates may provide investors with a reasonable starting point given how strained stock valuations have been over the past two years,” Marcella Chow, global marketing strategist at JPMorgan Asset Management, told CNBC. She believes the information technology sector can provide opportunities for long-term investors, given moderation in valuations in the sector and long-term growth prospects. “The information technology sector should see strong revenue growth given secular demand for software products and services as well as continued demand for hardware,” Chow added. Todd Jablonski, investment manager for Principal Global Asset Allocation at Principal Global Investors, believes it is not time to “run for the slopes” despite the challenging backdrop. The company manages more than $ 700 billion as of March 31. “Equities have proven their resilience and it has been surprising to many investors how resilient stocks can be to exogenous forces,” Jablonski said. Despite cheaper stock valuations, he warned that “the return will struggle” without a tailwind of simple economic conditions and positive earnings growth. Jablonski said he prefers US stocks given their relative resilience to the Russia-Ukraine conflict and basic economic strength. The importance of staying invested Thomas Poullaouec, head of multi-asset solutions for Asia-Pacific at T. Rowe Price, believes that an investor’s unique investment goals and horizons will determine their approach to the stock markets. “For long-term investors such as those planning to retire, our research will show that it is important to remain invested in the long term. While there are periods of volatility like this along the way, establishing the right asset allocation and diversifying their investments can help curb the impact of volatility on their portfolio, “said Poullaouec. He noted that the S&P 500 has experienced double-digit annual losses in just 13 of the last 94 years up to 2021. “While the one-year return can fluctuate dramatically, investors need to keep in mind that stocks have never lost ground, double-digit or on otherwise, in a rolling 15-calendar-year period since 1928, “he said. “Therefore, a long-term investor may feel more confident in holding stocks, even if they experience short-term declines,” Poullaouec added. The asset manager highlighted selective opportunities that he believes are “worthy investors’ attention”. His fund has increased its exposure to Asia ex-Japan to a modest predominance due to the prominence of the reopening task in the region, where inflation is also “less worrying” compared to other regions, according to Poullaouec. Australia is another “attractive market” due to its rising revenue forecasts and “solid domestic demand,” he added. Read more Here are the ETFs working during this brutal year. Strategists reveal how they trade in technology stocks – and the same names keep popping up. Similarly, Michael Purves, founder and CEO of Tallbacken Capital Advisors, believes that although stocks such as Microsoft and Alphabet are being revalued on the back of rising interest rates, these stocks have “incredible” finance and cash balance to support stock earnings growth. repurchase. Purves said he sees many “tactical upswings” in stocks that have been “really beaten up” in the last couple of weeks. This includes high-quality small-cap mining stocks, he said. Purves also favors energy and material stocks as a hedge against rising inflation.
A Wall Street sign is pictured on the New York Stock Exchange (NYSE) in New York, March 9, 2020.
Carlo Allegri | Reuters
With the recent carnage on Wall Street, CNBC Pro is asking strategists and investors what’s next for stocks and where they see pockets of opportunity in the weeks ahead.
