Stocks opened higher Tuesday after rebounding strongly on Monday, despite concerns persisting over the potential for a market pullback. Thomas McManus, CIO of Wells Fargo Advisors, shared his investing insights.
“The economic [recovery] shape is more of a letter 'V' in Asia, 'L' in Europe and 'U' in the U.S,” McManus told CNBC. “We’re going to see gradual improvement, but I think it’s going to be drawn-out and I think it could be bumpy.”
McManus said GDP growth for one or two quarters out of the next six is expected to be under 1 percent, which could scare equity investors and likely cause a market correction.
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“Short-term, you should be prepared for a 10 to 20 percent pullback,” he said. “But longer-term, it makes sense to pursue growth over value and a dividend growth strategy—not necessarily for dividend yield. Buy companies that have the ability to sustain a dividend during difficult times and the ability to grow it at a steady rate over time.”
McManus suggested the energy, consumer staples, and utilities sectors. He added that some of the cyclical sectors “may be a little bit ahead of themselves.”
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Proctor & Gamble