Volatility is somewhat refreshing, buy stocks: Wilmington Trust
If you can weather the wild swings in the market, Wilmington Trust’s Meghan Shue thinks it’s a great time to put some money to work.
It might sound counterintuitive, but she’s more comfortable investing in stocks now than at the start of the summer when Wall Street was calmer.
“It’s actually more disturbing when it looks like everything is fine and the skies are clear,” the company’s chief investment officer told CNBC’s “Trading Nation” on Friday. “It might be good to have risks on the horizon.
While she acknowledges that there is no dearth of issues ranging from the surge of the delta variant of Covid-19 to Federal Reserve politics to inflation, Shue is confident they won’t do. not derail the economic recovery or will not have a long-term negative impact on the market.
“The volatility that we’ve seen in the market is somewhat refreshing actually because we’ve had a very, very low volatility environment,” she said. “As a general rule, you see a decline of 5% to 10% [each year.] It’s been over ten months since we’ve seen anything more than a 5% decline. “
Although the Dow, Nasdaq and S&P 500 had a positive session on Friday, all three indices ended the week lower. The Dow Jones broke a three-day losing streak and the tech-rich Nasdaq had its best day in a month.
Shue, who oversees $ 141 billion in assets, notes that it’s crucial for investors to diversify and have a time horizon of at least 9 to 12 months due to instability.
“We don’t think it’s really safe to try to time the ebb and flow and back and forth of this particular trade,” said Shue, a CNBC contributor.
Its main holdings are financials, energy and materials as they are well positioned to benefit from economic growth and are expected to benefit from rising interest rates.
“We have an inclination towards cyclicals and value,” she noted. “We expect the first rate hike won’t come until late next year or early 2023. And I think the economy and the markets will be in a good position to handle that.”
She also sees a portion of consumer discretionary benefit from a strong back-to-school and vacation spending season.
“The consumer is in a very strong position,” she said.
And, this might not be one of his best places to invest, neither would Shue forget about growth.
“Also stay in certain technologies and in the most promising sectors of the market,” said Shue. “The places in healthcare and pharmacy that we love.”