Stocks are on sale, but investors are in no mood for a shopping spree, according to John Buckingham, AFAM Capital’s chief investment officer.
“We just had stocks go on sale 10 percent or even more for individual securities,” he told CNBC’s “Power Lunch” on Monday. “A long-term investor should be taking advantage of this and buying.”
The market saw a brief relief rally last week, as it closed the holiday-shortened period positive for the first time this month. However, it resumed its January blues with a drop Monday. The Dow Jones industrial average closed down more than 200 points and the S&P 500shed nearly 30 points.
“There just doesn’t seem to be buyers stepping up,” Buckingham noted.
Still, the climate is good for investing, he said, suggesting that investors buy the dip and start locating companies that are set to “do well” within the next decade.
“Right now you have stocks that are trading at very inexpensive fundamental valuations, with generous dividend yields; in a low interest rate environment; in an economy that we think is going to muddle along,” he said.
In the same vein, David Lafferty, senior vice president at Natixis Global Asset Management, told CNBC that the market is seeing values it hasn’t viewed since 2013, in terms of the price-earnings ratio.
“If you’re willing to commit some dollars to the equity market and maybe not watch them, (for a couple of weeks, for a couple of months,) I think this pullback we’ve had since the beginning of the year is a pretty good opportunity,” Lafferty said Monday on “Power Lunch,” speaking to long-term investors.
Recently, the equities and oil markets have been trading hand in hand, as gains in the commodity’s price have been mirrored in the stock market. Crude climbed about 6 percent Thursday, prompting the stock market to rally along.
On Monday, however, a new decline in oil prices caused the Dow to drop sharply in intraday trading.
Oil settled down 5.75 percent, or $1.85, at $30.34 a barrel, as it reversed course from Friday’s nearly 9 percent spike, as Iraq’s announcement of record-high production in December resurfaced concerns about oversupply.
Market watchers have feared that low prices in oil could spill over to the rest of the economy, but down crude prices are not necessarily bad, according to Michael Jones, RiverFront Investment Group’s chief investment officer.
“Low oil prices are really bad for a handful of states in the United States and a handful of countries around the world, and they’re great for everybody else,” Jones said Monday on “Power Lunch,” noting that low prices are “a big wealth transfer from the producers of oil to the consumers of oil.”
Fears of slowing oil demand in China (the world’s second-largest oil consumer, according to the EIA) have worried market watchers, but Jones contends that the world has made up for China’s “significant drop.”
“Demand for oil last year accelerated at the pace that it’s been accelerating at for the last five years,” he said. “If [it] kept growing at the same pace, that means that everybody else in the world’s been buying more oil.”