The S&P 500 plunged into a bear market earlier this week for the first time since March 2020, sending many investors into a tizzy.
According to one financial advisor, however, the sell-off could present a buying opportunity — particularly in bank and energy stocks and companies like Verizon.
“I think any of those old-school value names right now are great to have in your portfolio,” Payne Capital Management President Ryan Payne said on Yahoo Finance Live (video above). “And don’t think twice here if you’re a long-term investor."
The market has been on a steady decline since the beginning of the year, hammered by inflation and effects of the ongoing war between Russia and Ukraine.
May’s Consumer Price Index (CPI) data showed inflation has now reached a 40-year high at 8.6%, one day before the national average for a gallon of regular gas topped $5.00 a gallon.
“I think you buy with impunity here,” Payne said. “As a long-term investor, you buy when there’s blood in the streets. There’s blood in the streets right now, and it’s kind of like revenge of the nerds.
Value stocks, he said, have held up “way better.” These include companies like Verizon, along with Citigroup, General Motors (GM), and AT&T, which is the only stock among those listed that’s up year-to-date.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 13, 2022. REUTERS/Brendan McDermid“If you look at a portfolio of value stocks, it’s down less than 10% this year,” Payne said. “The only bear market you’re seeing right now is in growth, disruptive technology, and bitcoin. But the reality of it is if you take tech out of the S&P 500, you’re trading at 14 times forward earnings. That’s so cheap. That’s been as cheap as it’s been in years. I think you have a gift from the gods here as a long-term investor to buy.”
Plus, he continued, the markets have already priced in a recession, whenever that may be.
“Most of the damage is done here,” Payne said. “You may get some more selling on the downside. But at this point, how much are you going to get? … The damage has been done at this point. You can buy anywhere in here as a long-term investor, unless you need a yield to lunch today.”
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