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The time has come to buy risky assets, said Tuesday at CNBC a strategist from Bank of America Merrill Lynch.
"Historically, when investors are so bearish, now is the time to buy risky assets such as equities and commodities," said Jared Woodard, international investment strategist at BofAML, as part of Closing Bell. .
Woodard pointed out that he was considering an investment schedule of one to three months, citing greater macroeconomic risks for the economy next year.
But with investors already in bearish positions and a favorable policy emanating from the Federal Reserve, which reduced interest rates in July for the first time in 10 years and is expected to further reduce its exchange rate by a quarter of a point at its September policy meeting, Woodard said he saw significant results. short term potential.
"Historically, you have had significant positive short-term potential, with an average return of about 6% on global equities over a three-month horizon, when sentiment is also bearish," said Woodard.
The three leading indexes fell on Tuesday the first day of September. China and the United States introduced new import tariffs on Sunday, marking the latest escalation of the ongoing trade war. Investor sentiment was also weakened by the announcement of a contraction in the US manufacturing sector for the first time in three years.
But Woodard's call to investors to buy riskier assets comes from BofAML's Bull & Bear indicator, which has hit its lowest level since January. The sentiment indicator rose from 2.4 to 1.3 last week, a contrarian buying signal.
The indicator is based on a 10-point scale and takes into account 18 different inputs, such as fund flows, price action and the asset allocation of investors, large and small, said Woodard.
The bank said in a research note on Friday that the decline was due to capital outflows on debt and emerging-market equities, in addition to a rapid rise in Treasury markets.
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