Fidelity's Kalra: Stock Correction 'Provides Opportunities to Upgrade'

Tuesday, 12 Aug 2014 07:55 AM

By Dan Weil

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Many investors view the stock market correction of the past few weeks, which sent the S&P 500 down 4.3 percent from its record high of July 24 to its low last Thursday, as a buying opportunity.

Sonu Kalra, manager of the $16.6 billion Fidelity Blue Chip Growth Fund, is one of them.

"As a long-term investor, these are the pullbacks that provide opportunities to upgrade" holdings, he tells The Wall Street Journal.

Editor’s Note:
Dow Predicted Will Hit 60,000 — Buy These 4 Stocks Now


Many market participants say valuations are still reasonable. The S&P 500 had a trailing price-earnings ratio of 18.5 Friday, down from 18.6 a year ago, according to Birinyi Associates.

The bulls also note that second-quarter earnings have topped expectations for a vast majority of S&P 500 companies. The 500 companies are on pace for a profit increase of 8.4 percent in the second quarter and a revenue gain of 4.3 percent, according to FactSet, The Journal reports.

"We're in the midst of a readjustment that hasn't fully run its course, and I think it will play out over the next three to six weeks and create a healthier base for potential gains into the end of the year," Scott Glasser, manager of the $5.5 billion ClearBridge Appreciation Fund, tells The Journal. Glasser is selling shares of companies that miss his earnings or operating performance expectations.

Tom O'Halloran, a portfolio manager at Lord Abbett, tells the paper he likes large companies, including Apple and Microsoft.

Stocks rose Monday. The Standard & Poor's 500 index rose 5.33 points, or 0.3 percent, to 1,936.92. The Dow Jones industrial average climbed 16.05 points, or 0.1 percent, to 16,569.98 percent. The Nasdaq composite gained 30.43 points, or 0.7 percent, to 4,401.33.

"There is some sense that geopolitical risk out there is waning," Bill Schultz, chief investment officer at McQueen, Ball & Associates, tells Bloomberg. "We're at lower levels than we were two weeks ago, so there's a better entry point if you look to add stocks to your portfolio."

Editor’s Note: Dow Predicted Will Hit 60,000 — Buy These 4 Stocks Now

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