Despite Standard & Poor’s 500 stock index dropping as much as 7.4 percent from a recent record, stock market strategists point out that many of the factors that have supported stocks during their current five-year bull run market remain in place. The U.S. economy is still growing, and so are corporate earnings.
An Oct. 21 Associated Press (AP) reported that most strategists say investors should take advantage of the opportunities that come with a stock sell-off instead of letting the anxiety over a potential global growth slowdown dictate their investment methods. Investors fled to the relative safety of bonds last week, pushing up their prices and dropping the yield on the 10-year Treasury note to its lowest level in more than a year.
Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank told the AP that big shifts in financial markets are a good time to change, or rebalance, the proportion of stocks and bonds held by investors. “Since the financial crisis and the Great Recession, many investors have allocated too much of their portfolios to bonds, and shied away from stocks,” Davidson said.. “We are suggesting that investors who have been on the sidelines use this as an opportunity to get into the (stock) market.”
