Stock Market Sell-Off – A Buying Opportunity For Long-Term Investors
September stock market sell-off is a buying opportunity for long-term investors.
That's the consensus of investment analysts and advisors contacted by International Business Times.
September is usually a dismal time for investors. It's the month after the end of the summer when money managers make portfolio adjustments and trade volume picks up. In addition, it's the time for the first Federal Open Market Committee (FOMC) meeting in eight weeks, which gives traders and investors the opportunity to figure out where the Fed stands on monetary policy.
This time, the Fed remains on the hawkish side, harming equities.
Then there is the United Auto Workers (UAW) strike and the prospect of a possible government shutdown, adding to Wall Street's uncertainty over the fate of equities.
"It's not unusual to see some weakness in Aug-Sept," Thomas Samuelson, CFA, CMT, chief investment officer at Vineyard Global Advisors, told IBT. "The bulk of the seasonal weakness is typically over by the end of September. If it continues to follow the seasonal script, we should see the seasonal weakness end over the next week or so. Other cycles suggest it could be as soon as early next week."
While it's almost impossible to time the end of Wall Street's sell-off, "good merchandise," to use Warren Buffett's metaphor, is on sale.
Since the beginning of the month, the S&P 500 is down 5%, the Dow Jones 3% and the tech-heavy Nasdaq 6%. These indexes include some of the world's best companies with plenty of "moats," barriers to entry to protect and defend their competitive advantage.
Thus, the longer the sell-off continues, the greater the bargain for long-term investors.
"Many people think that they can avoid market declines and anticipate market rallies by moving in and out of the market," Robert R. Johnson, Ph.D., CFA, CAIA, professor at Heider College of Business, Creighton University, told IBT.
He thinks that's a mistake. "Attempting to time the market is 'fool's gold.'" he added. "Is now a time to buy? Yes. But for long-term investors, it is always a time to buy. For long-term investors, there is no time like the present."