Buy Any Further Significant Pullback in Equities - Goldman Sachs

January 26, 2022 5:41 AM EST
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Goldman Sachs strategist Peter Oppenheimer has urged investors to prepare to go long US equities in case another significant weakness at the index levels occurs.

Such a scenario should be seen as a buying opportunity, despite GS’ projections that stocks may have a moderate upside this year.

Oppenheimer argues that the correction will not turn into a bear market. History suggests that tightening cycles usually yield low, but positive, stock returns. However, they also come with high volatility.

“Higher real interest rates and improving profit fundamentals should also change the perception of value sectors away from ‘value traps,’ to ‘value opportunities,’ and the growth in ESG and de-carbonization support these trends,” Oppenheimer wrote in a client note.

The strategist sees opportunities in some profitable tech companies that are now clearly trading in the oversold territory.

Similarly, Citi analyst Robert Buckland sees a buying opportunity in stocks, especially outside the U.S. Buckland urges investors to look at defensive stocks in the U.K. and Japan.

When it comes to sectors, Buckland prefers consumer staples, health care and telecoms, which are less sensitive to higher rates.

In case further weakness occurs in the market, the Citi strategist recommends buying value trades like the FTSE 100 or financials.

By Senad Karaahmetovic | [email protected]

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