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Ignore stock bloodbath and buy back 2015's winners, Golub says
[LONDON] The bloodbath in biotechnology and tech stocks? Merely temporary, says Jonathan Golub of RBC Capital Markets.
One question the New York-based chief US market strategist at RBC says he's recently been asked what the specific catalyst was for the stock selloff.
The answer he says he plans to give clients: "If we don't see something that's a potential downside event, why wouldn't I be buying in?" Mr Golub said in a Bloomberg Radio interview today.
"When market volatility comes back to earth, stocks typically rally extremely strongly." He noted how a gauge measuring equity swings soared to a three-year high at the end of last week. That's near where the index's level in March 2008, when Bear Stearns Co collapsed. The bearish catalysts for equities were much clearer and stronger seven years ago than now - a sign the current market volatility isn't justified, he said.
Still, with emerging markets unlikely to be a source of growth, investors should buy industries that are less tied to global risks, such as health care, biotech and "new tech as opposed to old tech," Mr Golub says.
"Those are the names that did well up until the point of this recent rout and that's where your opportunities are going to be in the next year or so forward," he said.
Mr Golub also said in order for the broader stock market to regain its footing, commodity and energy shares need to see some rebound. Trading today in US stocks will be volatile but the market may end up higher, said Mr Golub.
"The good news is there's a pretty strong floor developing under the S&P 500," Mr Golub said.
"It's like a basketball game where the outcome is determined in the last 90 seconds."