Morgan Stanley strategist who predicted volatility says buy now

Michael Wilson sees the S&P 500 index ending the year 5% above its current level

Feb 12, 2018 @ 2:47 pm

By Bloomberg News

The Morgan Stanley strategist who predicted volatility would ramp up in 2018 says the damage has been done and it's time to buy stocks.

Michael Wilson, the firm's chief U.S. equity strategist, said the "volatility shock" that hit equity markets last week has pushed valuations down to attractive levels, with the S&P 500 Index trading at just 16 times forward 12-month earnings per share.

This is a "level we believe is too cheap" given that 10-year Treasury yields remain below 3%, Mr. Wilson said in a note to clients Monday.

The S&P 500 Index headed higher Monday. As of 2:43 p.m. New York time, it was up 1.63%, or 42.67 points, at 2662.22.

Mr. Wilson's recommendation to be a disciplined buyer of stocks at these levels contrasts with his call from a week ago, when he said there was "no rush to buy this dip."

But last week's market action, which saw the S&P 500 dip into official correction territory from its Jan. 26 high, changed his tune. Mr. Wilson believes "most of the price damage is over for this correction," although he doesn't expect volatility to return to the extreme calm that characterized 2017.

"As a result, we do not expect a quick return to the prior highs although we do think higher highs for the S&P 500 are likely ahead of us before the cycle top later this year," he wrote. Mr. Wilson sees the index ending the year at 2,750, 5% above current levels.

(More: How advisers' favorite fund families have fared amid stock volatility)


What do you think?

View comments

Recommended for you

Featured video


What's behind the TCA, ETrade deal?

Deputy editor Bob Hordt talks with senior columnist Jeff Benjamin about what each party in the recent acquisition stands to gain by joining forces.

Latest news & opinion

HighTower on prowl for new CEO, Weissbluth to become chairman

Move is latest in Chicago-based RIA consolidator's effort to expand senior leadership team.

What's in a name? For TCA by ETrade, everything

Trust Company of America is gone, and there's big buzz over the name change. But turning the custodian into an industry powerhouse will take a lot longer — if it happens at all.

When it comes to regulating AI in financial services, murky waters are ahead

Laws are unclear on how the technology fits in with compliance.

As Ameriprise case shows, firms on hook when brokers go bad ​

The SEC will collect $4.5 million from the brokerage firm for failing to supervise brokers who were ripping off clients.

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print