Correction and Bear Market Mean Buying Opportunity for Investors
With the Dow down over 1,400 points in two days, the millions who have invested their savings in the market are troubled and wondering if the time to pull out of the market, however, Bob Seidenschwarz with S.G. Long says the opposite is true.
KGVO reached out to Seidenschwarz on Monday for his view of what is happening with the equity markets. He said current conditions are what he termed ‘a perfect storm’.
“When I say the perfect storm, it really is because we have energy prices we haven't seen, really in 15 to 20 years and no end in sight to that because of shortages under production and high demand have led to what we're seeing right now with energy prices,” began Seidenschwarz. “At the same time, we've got the Fed (Federal Reserve) worried about inflation and raising interest rates. Now they're at 50 basis points and more to come.”
Seidenschwarz said he has seldom seen a better buying opportunity for investors.
“If you're in that 401 K, this is a golden opportunity you keep adding to it, especially if your time horizon is long term,” he said. “I actually am now getting pretty darn excited about the market. I'm seeing great companies going on sale, and those great companies are in your 401k portfolios. So those fund managers are buying as opposed to selling at this point.”
Seidenschwarz said it’s ‘the perfect storm’ because both a bear market and a correction are occurring, which means a golden buying opportunity for investors.
“A correction is taking place, and what defines a bear market is when an index like the S&P 500 or the Dow or the NASDAQ is down 20% or more. Well, we're there. We are in bear territory. The question is how long does that last? I'm not going to make guesses to that because it's difficult to do. A recession is technically when you've had two negative quarters in a row, and at this point, we're getting closer to that.”
Seidenschwarz said amid all the financial wailing and gnashing of teeth, there is still good news for wise investors,
“There's good news out there in the economy,” he said. “Earnings are still good, and we're seeing companies that are still very profitable and who are growing their businesses. So if we do get into a recession, I think the big question is, is it a true deep recession that lasts not just several quarters, but maybe several years? Pressed for an answer, I would say a recession very likely but not a deep recession that takes us down the road for several years.”
Seidenschwarz said it is extremely important for investors to stay in close contact with their financial advisers or brokers during this time and keep the lines of communication open.
Seidenschwarz is also part of the Montana World Affairs Council and brings guests to the KGVO Talk Back show on a regular basis.