For some investors, this is a good time to be afraid, to sell, to find a place to hide. After all, the Dow Jones Industrial Average was down more than 400 points at one point on Wednesday.
Uncertainties do abound, from conflicts in the Middle East to a downturn in China, from climate change to oil prices so low they could destabilize the Russian economy.
There is another view, however, that tells investors now is the time to buy.
Bruce McCain, chief investment strategist for Cleveland-based KeyBank, was in Tacoma on Wednesday. Over breakfast, he took the side of contrarians who see opportunity in a sputtering market.
“The conditions of a downturn just don’t seem to be there,” McCain said. “We’re still stuck in a slow growth trend.”
Leading economic indicators and monetary policy do not indicate a bear market, he said.
“What this looks like is a shorter-term corrective action,” he said. “I think for the first time in a long time we have a shot at a fairly decent correction.”
Yes, people are worried.
“I don’t think it’s going to stop people from shopping or from flying. It’s one of those emotional crises, but it won’t affect the long-term trajectory of the economy, or long-term equity prices,” McCain said.
But still, he notes, “The Ebola crisis is providing a huge worry for people. You’re worried about Europe, and along comes Ebola. ISIS is in the background. This is beginning to affect people, adding to the general anxiety.”
From which comes a McCain axiom: “The best opportunities are the most anxiety-producing.”
“We’re in a mood to panic,” he said. “Things have been so good for so long, we need to wash that out and get back to neutral.”
“The fact that everybody is worried means an opportunity,” McCain said.
So are we at the bottom of this downturn?
“We’re getting closer,” he said. “I do think we may take a short-term hit, but I don’t think there’s anything that actually scares me.”
He said he is looking for stocks that show strong revenue growth, strong earnings growth and high margins.
“I’m going to buy more,” he said. “I’m going to put more money into those companies.”
He advises, “Stick to the discipline. Buy more if you can. Don’t be panicked into selling good investments. I am seeing a reluctance to invest, a hesitancy. That tells me this may be the correction we’ve been waiting for.”
He counts the current correction at between 6 percent and 8 percent. A 10 percent correction would signal “a time to make serious investments. You want to be focusing on strong growth.”
Among individual stocks, he likes Google, Qualcomm, Mastercard, Priceline, Amazon and Starbucks, among others.
These are, he said, “a few of the names that have great potential.”