“I don’t see it as the big one”: market strategist
The volatile start of the stock market in the fourth quarter has some investors wondering if this is the setting for a real bear market later this year.
A growing number of Wall Street banks have said the stock market looks vulnerable. Morgan Stanley recently said he expects a growing risk of a 20% drop in the S&P 500 as evidence begins to point to weaker growth and falling consumer confidence.
So far in October, stocks have hovered between big gains and losses as the so-called fear gauge, the CBOE Volatility Index, (^ VIX) has surpassed 20, after spending much from summer to mid-adolescence.
DR Barton, director of Woodshaw Financial Group, told Yahoo Finance Live there could be more downside to come, but not enough to completely derail market bulls.
“I don’t see that as the big deal, the big pullback where we’re going to go down 20% and enter bearish territory,” Barton said. “And there are a bunch of reasons why, but the most important is that we are always inundated with so much money. It gets over so much other bad news that I think it’s the one umbrella that’s still going to keep this market buoyant for quite some time.
Investors have been concerned about a range of issues, from rising inflation and persistent supply chain grunts to the Chinese group Evergrande’s debt crisis and a looming debt ceiling deadline which could push the United States into its very first default.
“All of those overhangs are there,” Barton said. “But what I’ve seen time and time again is that every time we get one of these withdrawals, market participants say ‘yes, but I don’t wanna miss it if we get another great length. in advance. ‘ And I think that’s what we’re going to see happen at the end of the year, another big head start before we have any judgment whatsoever. ”
A recent surge in bond yields scared investors and deflated the stock market, but Barton said unless there is a sudden rise in rates, a gradual rise in Treasury yields will ultimately be positive for investors.
“We have to remember that one of the things that tells us if these bond yields are rising is the expectation of an expanding economy, and that’s not negative for the market. So gradual, good. Big, not so good, as far as the stock markets go, ”he said.
Barton said he uses the big down days as opportunities to select stocks that are on his wishlist.
In anticipation of the passage of an infrastructure bill, Barton has said he is a buyer of industrial goods and materials for the next year.
“I love these pullbacks right now, and until the markets tell me something drastically different about the techniques, I’m going to continue to be,” he said. “Whenever the big techs pull out, I like to swing and nibble on them.”
Alexis Christoforous is a presenter at Yahoo Finance. Follow her on Twitter @AlexisTVNews.