As volatility reigns, investing opportunities hit two-year high: Wells Fargo
October is among the most volatile months on record for the Dow Jones Industrial Average and the S&P 500. That action has erased year-to-date gains for both and sparked concerns about the end of the equity bull market run.
But, fret no more. According to Wells Fargo’s Investment Institute, an imminent recession isn’t likely, and if you can handle market volatility – then you could sign yourself up for some impressive profits by investing in this market.
“Fundamentally, we see the economy as being a long way from a recession,” the bank said in a note. “But markets are adjusting and repricing a number of key items” the firm added.
The bank advised that investors right now should be ready to increase U.S. equity exposure, but know that this could be “the end of easy.”
According to Wells, the bank sees the current conditions as having the potential to create some of the best entry points into equity markets since the November 2016 elections.
Looking back at that time, the Dow was trading just above the 18,000 level. Now, even with recent losses, it is hovering below 25,000. The S&P 500 was just above 2,100, now it is near 2,700.
If you are looking for stock opportunities, there are plenty. 70-percent of stocks in the S&P 500 are in correction territory, including Amazon, Google, JPMorgan, Exxon Mobil and Bank of America or a bear market. Those include, Facebook, AT&T, Intel and Netflix.
But, the unprecedented period of low volatility and above-average asset returns across equities, fixed income and currencies has probably come to an end.
Wells Fargo added that, “we favor deploying cash now, or even allocating incrementally over the coming days and weeks.”