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Investment Expert David Schiegoleit: 5 Percent Stock Plunge Will Ring in New Year

(Dollar Photo Club)

Monday, 02 January 2017 01:59 PM


One stock expert sees a “fantastic” buying opportunity if only savvy investors can stomach a 5 percent market drop to ring in the new year.

Expert David Schiegoleit told CNBC that the stock market rally has gotten a bit "long in the tooth" and could pull back 3 percent to 5 percent.

That could present a "fantastic buy-on-the-dip opportunity," the managing director of investments at The Private Client Reserve of U.S. Bank said.

"If you do see a pullback like that, it would be short-term in nature, and I think the pain would actually come in the sectors that did the best since the election," like financials, telecom and industrials, he said.

There may be a 'fantastic' buying opportunity after the New Year, expert says

To be sure, the benchmark S&P 500 is set to post a roughly 10 percent price gain for 2016 and around 12 percent on a total return basis, including reinvested dividends. That tops the single-digit increase expected by market participants polled by Reuters a year ago, with more than half of the advance coming after Donald Trump's Nov. 8 presidential victory.

The Dow Jones Industrial Average was on pace to rise more than 13 percent for 2016, with a total return above 16 percent.

But investors see several warning signs for 2017, including stocks at traditionally expensive valuations; investors registering particularly bullish sentiment; and the Federal Reserve primed to raise interest rates several times this year.

Meanwhile, a market lifted in part by hopes for Trump's policy agenda could be deflated should any of those hopes be dented once he begins in office. The S&P has rallied by more than 5 percent since Election Day, while the Dow has climbed by more than 8 percent.

"If anything, we head into the new year with the likelihood we will probably see some near-term weakness in equities primarily because of the move we’ve seen higher," said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York. "You will see some winning trades being taken off the table and, in general, a reset."

But other respected investment gurus forecast a continued runaway bull market under Trump.

Veteran financial guru Larry Kudlow, who served as the Donald Trump campaign's senior economic adviser, predicted to Newsmax TV that the record-setting stock rally “may go on for years” because the market “likes what it sees” before the president-elect has even officially taken office.

Stocks could drop in a natural turn of events, but for the most part, get ready for more record-high stock-market finishes, he recently told Steve Malzberg on “America Talks Live.”

“The Trump rally may go on for years,” said Kudlow, a Newsmax Finance Insider, radio talk-show host and CNBC senior contributor.

“It's not going to go on uninterrupted, but the market is telling you it likes what it sees regarding new economic policies to help business and to help growth and help jobs,” said Kudlow — host of "The Larry Kudlow Show" and author of "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio.

Trump's expected agenda of economic stimulus and reduced taxes and regulations has particularly fueled financial and industrial shares. On Friday, sectors that have underperformed - healthcare, consumer staples, utilities and tech - led the way.

“There will be correction but on and off,  this thing could last years,” said Kudlow, said who worked as Reagan’s budget deputy between 1981 and 1985.

(Newsmax wire services contributed to this report).

© 2019 Newsmax Finance. All rights reserved.

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One stock expert sees a "fantastic" buying opportunity if only savvy investors can stomach a 5 percent market drop to ring in the new year.
stock, market, plunge, schiegoleit
Monday, 02 January 2017 01:59 PM
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