Stocks opened lower Friday after a report showed September job losses were far worse than expected. Is this the beginning of a market correction? David Spika, vice president and investment strategist at WHG Funds, and Michael Yoshikami, president and chief investment strategist at YCMNET Advisors and a CNBC contributor, shared their insights.
“This is a follow-up to the poor economic data we’ve seen over the past few weeks and it’s clear that the economy is settling in,” Spika told CNBC.
“We probably won’t see the 4 to 5 percent GDP number next year that some investors were looking for—maybe around 2 percent. So this is a good opportunity for the markets to sell off, for investors to find a better entry point.”
Spika said it is going to be a stock picker’s market and investors should buy the higher quality names leveraged to foreign growth, such as the industrials, technology and global consumer sectors.
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“Money is going to rotate out of the lower quality, high beta companies that have led the rally thus far into high quality companies with good free cash flow, low debt that can take market share and finance their own growth,” he said. “That’s where you’re going to see the opportunity over the coming months.”
In the meantime, Yoshikami said he expects investors who missed the first rally to rush into the market if it goes back 5 to 10 percent.
“People are going to be buying on the dips,” he said. “But I think you’ve got to be very careful that you don’t just buy everything. You’ve got to buy good quality cash-flow oriented companies, because it’s not going to be a robust recovery in my view.”
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No immediate information was available for Spike or Yoshikami.
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