Tags: stocks | equities | markets | Dow

Time to Buy on the Dip? Experts Disagree

By    |   Tuesday, 04 February 2014 11:19 AM

Stocks have plummeted from last year's highs. Following Monday's sell-off, the Dow Jones industrial average is down 7.3 percent so far this year.

So, is it time to buy on the dip?

Savita Subramanian, Bank of America's head of U.S. equity and quantitative strategy, says "yes."

Editor’s Note: Billionaires Dump Stocks (See Video)

"I do see this as a great buying opportunity for some of the higher-quality names in the S&P 500 that have sold off on emerging market exposure or have sold off just because they had a whiff of exposure in these regions that are flashing some dangerous signals," Subramanian told CNBC.

But Barry Knapp, the head of U.S equity portfolio strategy at Barclays, says no, at least not yet. U.S. stocks typically fall 8.5 percent when the Federal Reserve ends its loose monetary policy, but then later rebound, Knapp told CNBC.

"At that point the rest of the world would probably stabilize as well, at least where they haven't done serious damage to their economy by raising interest rates sharply in response to it."

Markets are flashing buy signals, and many stocks are now at attractive valuations, writes John S. Tobey for Forbes.

Media headlines describing stock markets, which are filled with words like "hammer," "slam," and especially "plunge" and "fear," are buy signals, and the 50-day and 200-day simple moving averages seem to point to better days for stocks.

"The stock market’s decline can be viewed as one of those periodic adjustments, reflecting both fundamental fine-tuning and a shakeout of 'weak' investors or, at least, weak investor thinking," he argues. 

One fund manager said he'd wait for the S&P 500 to drop to 1,700 before buying. But a round number for an index is meaningless, Tobey says, explaining that any index is composed of many stocks with different valuations, some attractive, some not. Stocks may fall even further, he adds.

"However, all bottom periods have that look, so beware the comfort of sitting back, not acting and missing out. Instead, look back a month ago and imagine if you were offered today’s prices then."

Editor’s Note: Billionaires Dump Stocks (See Video)

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Stocks have plummeted form last year's highs. Following Monday's sell-off, the Dow Jones industrial average is down 7.3 percent so far this year.
stocks,equities,markets,Dow
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2014-19-04
Tuesday, 04 February 2014 11:19 AM
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