Volatility a ‘bargain hunting’ opportunity: Strategist

#bargain #stockmarket #stocks #yahoofinance

US stocks are trading lower (DJI, GSPC, IXIC) following reports that Iran is preparing to attack Israel, fueling investors’ worries about geopolitical instability. U.S. Bank Asset Management Group senior investment strategist Rob Haworth joins Brad Smith on Wealth! to discuss how investors should position their portfolios during increased volatility.
“What we’ve seen historically from conflicts is this does tend to be short-lived. We try and look through this and look at the opportunities that may arise as we see equity prices soften here a bit,” Haworth says.
“The key question is what really happens to US and global economic data in the wake of any attack or continuation of this conflict, and that’s maybe where the epicenter is oil prices. And we are seeing oil prices come up, but they are still at quite low levels. If we think about where they were just last year earlier in the conflict. So I think that’s maybe the good news is oil prices are not elevated yet, even though there is… heightened fear in these markets.”
The strategist says he “would look at this as more of an opportunity to extend, to look at maybe lower quality credit on the fixed income side and then even within the equity portfolio, start looking at those areas where you’ve been trying to shore up your positioning. It is a tough day for many of the more income-oriented sectors, like financials and industrials, but that’s maybe an area to start to look for bargain hunting should we see this sell-off extend a little bit.”
During uncertainty about the US presidential election, Haworth says “Our own work tells us that really what matters when it comes to the market and the economy [is] ‘How does this impact the economy?’… The good news for the US right now is the story is still a positive one. We’re still seeing positive revisions for economic growth from consensus economist expectations. The story is still one of solid economic growth slowing inflation, a Fed that is moving interest rates down and expected… poised to move interest rates lower.”
The strategist says “The Fed move in September really rang the bell for investors that are stuck in cash that they need to start their transition now into what they want their portfolio strategy to be.”
He adds, “In the long term, we still think technology and communication services have significant value, but that’s more of a long-term play. The challenge right now is those valuations are elevated. In the near term, we look at income beneficiaries that have maybe had a tougher time financials, industrials, maybe not energy today but certainly eventually.”
For more expert insight and the latest market action, click here to watch this full episode of Wealth!
This post was written by Naomi Buchanan.

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