(Fox Business) It’s been an abysmal year for the U.S. stock market, but some experts say that it’s the perfect time to for investors to buy the dip.
n an analyst note obtained by FOX Business, Wells Fargo analysts said the market has likely dropped enough to account for what comes next in the economy and that the worst has surfaced already, making it an opportune time to buy.
“Seek to take advantage of this correction and any further downside that may occur by incrementally putting cash to work,” the analysts, led by senior global market strategist Scott Wren, wrote.
While Wren said he is uncertain whether stocks have found an ultimate bottom, he believes the price moves over the past six months have been in anticipation of what is likely to occur.
“After all, the stock market tends to be an anticipatory mechanism,” Wren wrote. “Should the economy slow and eventually fall into recession and inflation stays higher for longer, we believe financial asset prices have adjusted to reflect this likely reality. But, eventually, brighter skies will be on the horizon.”
Wells Fargo expects the economy to slide into a recession by the end of this year and to emerge from the downturn in mid-2023. Historically, the benchmark S&P index has bottomed out, on average, about four months before the end of each recession dating back to 1948.
“That means we need to anticipate where the economy is headed and, optimally, begin to adjust allocations to reflect potential improved conditions in advance,” the strategists said. “So our recommendation to be patient remains intact. We want to take advantage of this correction and any further downside that may occur by incrementally stepping into the market with sidelined funds.”
Still, buying the dip — and trying to time the market — can be a risky approach.