Standard & Poor’s (S&P) Equity Strategist Alex Young spoke with FBN’s Liz Claman about how the S&P’s decision to downgrade the United States deficit has impacted the markets today. Young said he is viewing the market selloff as “an opportunity to look for bargains; especially in the non financial space.” He went on to say that investors should not “overreact in these periods of panic” and “there is more value to be added by looking for bargains today than throwing the baby out with the bath water.” Excerpts from the interview can be found below, courtesy of Fox Business Network.
On how he is viewing this market selloff:
“We are viewing this as an opportunity to look for bargains; especially in the non financial space. We have been underweight the banks for a while. We have been overweight consumer staples for most of this correction since May 17th, we are looking for good emerging markets, rising and high quality dividend yields. There is more value to be added by looking for bargains today than throwing the baby out with the bath water.”
On whether he had anticipated such a large market sell off on the news of the S&P downgrade:
“I think the selling is a little bit more than I expected. The thing that was interesting about the timing of the downgrade on Friday is it came on the heels of one of the worst two week runs to begin with. We were already very oversold, the market had re-priced itself for weaker growth. What we are seeing today is this has never happened before, it’s that headline effect, that shock effect. No one has any scorecard they can go back and look at in terms of how this plays out. I thought we might see this contained more in the futures this morning; when we were down six or seven percent earlier I was definitely taken aback.”
On what advice he would give investors:
“There is a lot of uncertainty out there and fear but that is generally what you see at the bottom. Don’t put all your eggs in the market today, don’t overreact in these periods of panic; do things gradually. Anyone who is investing for more than a 24 hour time horizon is going to be pretty well rewarded looking back six months, a year from now, if they buy today rather than sell today.”
On the risk of a double dip recession:
“I think that is the biggest risk with this event; is it enough to tip us into a double dip? We don’t think so.”
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