“When your stomach doesn’t feel good because we had a few bad days in a row, that is a good time to buy stocks. Conversely, when we have had a few good days, it is time to trim,” investing veteran Bob Doll said.
If you’re relatively new to investing, and you think 2022 has been a year from hell, imagine being in the stock market for over 40 years.
High-level takeaways: Stocks will be trapped in a trading range this year. It’s a trader’s market. Take advantage of it. We’re not going into recession this year, but the odds increase to 50% for late 2023. Favor value, energy, financials and old-school tech. Bonds will continue in a bear market as yields keep rising, medium term, and be careful with utilities.The here and now Earnings season takes over as the driving force. So far, so good.
“Pulling hard at one end of the rope is reasonable, albeit slowing, economic growth and reasonable earnings growth. Pulling in the other direction is inflation and higher interest rates,” says Doll.“This is a market that is going to confuse a lot of us because it is relatively trendless,” he says.“When your stomach doesn’t feel good because we had a few bad days in a row, that is a good time to buy stocks. Conversely, when we have had a few good days, it is time to trim.
Recession There won’t be a recession this year, Doll says. Why not? The economy is still responding to all the stimulus from last year. Interest rates are still negative in real terms , which is stimulative. Consumers have $2.5 trillion in excess cash because they hunkered down on spending during the pandemic.
* Energy: Doll still likes the group, but, short term, it’s worth trimming because it looks overbought. “I think I get another chance,” he says. If you don’t own any, consider starting positions now. Energy names he favors include Marathon Petroleum MPC, -1.87% and ConocoPhilips COP, -2.70%.
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