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Wells Fargo’s Manley: Stocks Volatile Short-Term, Strong Long-Term

By Dan Weil   |   Thursday, 17 Nov 2011 08:16 AM

Europe’s debt crisis and U.S. economic uncertainty have injected major volatility into the U.S. stock market. That’s not going away anytime soon, but stocks still look attractive for the long term, says John Manley, chief equity strategist at Wells Fargo Advantage Funds.

"If you want to be in it for the long term, you just have to put up with the volatility," he tells Yahoo.

In just the last two months, stocks have endured a double-digit percentage-point swoon, followed by a double-digit rebound.

“At some point in time, we emerge from a period of high volatility and fairly low valuations, tremendous skepticism to one where the mood is better,” Manley says.

“Between now and then it can go down, it can go up. On a short-term basis it’s hard to say with all this volatility. It’s obvious this isn’t a top. Is it a bottom? I don’t know.”

For perspective, Manley turned back to the day of Ronald Reagan’s election as president in 1980. Should you have bought stocks, given the outlook ahead? The answer is yes, Manley says. But stocks fell 10 percent before beginning a huge bull run.

One positive element of the volatility is that it can give you attractive entry points at which to buy shares. You might set up a formula to buy anytime the market falls by say 5 percent and then purchase in bigger amounts when it drops another 5 percent.

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