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


How InvestmentNews picks its Women to Watch winners

The process is laborious and exacting, but well worth it. The end result each year is an impressive group of women in the advice industry from whom others can draw inspiration.

Latest news & opinion

10 biggest HSA providers rated

Morningstar rated the largest plan providers as investment and spending vehicles.

Morningstar: DOL fiduciary rule reduces inflows to mutual funds with high loads

With the measure's demise, will the SEC's advice reform sustain the momentum?

6 tax strategies for year-end planning

How to help clients maximize their wealth using specific tax strategies before the end of the year.

Ohio National offers buyouts, ends commission trails amid jumbled regulatory oversight of VAs

Jurisdiction is shared between the SEC, Finra and state insurance commissioners. Will any of them step in?

6 mistakes advisers make when onboarding new clients

Starting a new relationship with a client is harder than it looks.


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