Rich Barry, floor governor at the New York Stock Exchange, has a simple piece of advice for investors looking at Wednesday’s sell off: Buy the dip.
In an afternoon email, Barry looked at some of the dynamics moving stocks on Wednesday, concluding with: “All-in-all, let’s call today just another of the many ‘buy-the-dip’ opportunities we have seen during this ongoing secular bull run. No worries.”
Near 2:00 pm ET on Wednesday, the Dow was down 195 points, the S&P 500 was down 17 points, and the Nasdaq was down 82 points.
Here is some of what Barry said traders on the floor are talking about on Wednesday:
Down 200+ points in the Dow and trading near session lows?! Relax… It looks a lot worse than it is. Don’t worry; we’re on this… First, we can chalk a portion of this move up to some good old-fashioned end-of-quarter profit-taking because this quarter’s best-performing stocks are clearly taking the brunt of the hit today, (particularly in the high-flying Tech space and Biotech space). As one of our trading desk compadres so beautifully elucidated in an IM a little while ago, “The top-beta names are getting smoked after gapping higher on the opening!!” This points to a short-term profit-taking pullback. Nothing more… On a longer-term outlook, one topic of many trader-discussions has been centered around increasing worries about the strong dollar having a big negative effect on earnings of large multi-nationals… According to recent estimates, the next two quarters’ earnings are going to be a bit sketchy…
The concern is that if the dollar keeps rallying, we are not going to see any earnings growth at all this year. And yes, while many companies do not break out currency impact, or even the contribution to revenues and earnings by geographic region, enough do to indicate that a significant dollar rise could knock several percentage points off earnings and revenues.
And as we noted on Tuesday, companies are about to enter a pre-earnings blackout period for buying back stock, and once they do, it may be more perilous for investors to buy dips in the market.
So with companies out there still buying back shares, the time is now to buy the dip and catch a bid.
Business Insider Emails & Alerts
Site highlights each day to your inbox.