- Stocks are in “the best risk-reward” scenario of the past two years as coronavirus risks drive prices to multiyear lows, Mike Wilson, chief investment officer at Morgan Stanley, told CNBC Thursday.
- The bank has been buying back into equities “over the last two, three, four weeks” as prices stabilise, he added.
- Investors should avoid trying to time a market bottom and instead buy stocks when they reach prices they’re comfortable with, Wilson said.
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Stock market volatility is finally cooling after coronavirus worries fuelled weeks of wild price swings, and Morgan Stanley’s chief investment officer thinks it makes for a prime investing opportunity.
Investors are in the midst of “the best risk-reward” situation of the past two years, Mike Wilson said in an interview on CNBC Thursday. Stocks on Wednesday posted their first back-to-back gains since mid-February, suggesting a month of dead-cat bounces and steep declines could be changing course.
The bank has been slowly reentering the market “over the last two, three, four weeks” after coronavirus sell-offs pushed equities into bearish territory, Wilson said. While coronavirus risks persist and the US economy is likely heading into a recession, stocks’ prices represent an attractive entry point for investors with cash available.
“The market has been expecting a recession at some point,” the investment chief said. “Bear markets tend to end with a recession, so we think the bear market is ending.”
The S&P 500 is down roughly 23% from its February 19 high, though the index slumped as much as 30% before stabilizing. Several banks have projected the index could slide as low as 2,000 before recovering through the second half of the year.
Predicting the exact date or price where stocks will bottom out is futile, Wilson said, and investors should instead look for levels they’re comfortable with.
“You need to be thinking about, is this a good price? Do I like this price if I’m investing for the next six or 12 months?” he said. “And we do. We like these prices a lot.”
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