(CapitalWatch, May 20, New York) We are now down over 20% from the all-time high the S&P posted in January. That's after a week when traders tried to wrestle off a hungry bear, a week in which signs of an uptick proved unsustainable, a momentary lapse in the universe's judgment. At a more than 20% decline, we are indeed looking at a bear market, a market that has seen the S&P, the Dow, and the Nasdaq slide for seven grueling weeks in a row.
Next week, I expect a repeat of this week's rout, albeit with even lower indices on next Friday's close. The only question now is whether or not market sentiment will push indices higher on Monday and Tuesday from today's close in a collective effort to enable investors to get out of some positions at a less depressingly low share price. The push—should it even occur—will be short-lived. By Wednesday, all signs will point to a bad end of the week. And what if we see a market even lower on Monday? Then the inevitable additional decline of 10% to 15% over the next few months is moved back a bit, which may be a good thing. The more the market tries to stave off the bear, the more investors (myself included) are likely to enter some short-term trades in the hope of seeing a bit greener in their online portfolio.
But the time for short-term options or swing trades is over: The time to look for big bargain stocks that may decline even further but are worth holding forever has truly begun. The names to look for here should you plan to buy and not even look at their share price until this time next year are names like Amazon (Nasdaq: AMZN), Roku (Nasdaq: ROKU), and Microsoft (Nasdaq: MSFT), as well as the cybersecurity company Zscaler (Nasdaq: ZS), the last of which should see more selling pressure in the near term (hold off on this one until some of the pressure lightens).
The good news (if there is any) is that we are entering into a time when retail investors looking for long-term buys should think of entering into the market. If one is looking for value mid and long-term, Warren Buffet has long been the oracle worth listening too—and mimicking. Buffet recently bought Chevron (NYSE: CVX) and Occidental (NYSE: OXY) in the oil space. In the tech space – Buffet picked up Activision Blizzard (Nasdaq: ATVI). That stock should see a 20% or more increase in its share price when the deal with Microsoft closes. While that could take up to a year, a 12-month out forecast is exactly the investment timeline that investors need to be looking at right now.
Along with some of the aforementioned symbols, there are plenty more from which to choose. But expect the next few months to be a slide deeper into the bear's cave. Next week will determine not how dark the cave will be, but how quickly the markets enter—and eventually—exit it.
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