You can’t help but think about all these bearish market strategists that have been pounding the table on some sort of market correction over these past several weeks. Sure, many people have been confident that a sell-off was nigh through most of 2021. But such bears have really doubled down on their bold calls for the broader stock market to finally slip after going so long without so much as a 5% peak-to-trough decline.
What’s the consensus market strategist view?
The markets have gone so long without a 10% or even a 5% correction. Thus, we’ve long overdue, and it’ll probably happen in September or October, two months of seasonal weakness. Also, valuations are stretched, which further reinforces a thesis that many beginner investors have likely subscribed to by keeping cash on the sidelines and restricting their buying activity, at least until September is over.
Add Delta variant cases into the equation, and it seems outright foolish (notice the lower-case “f” here, folks!) to deploy some money in the markets right now, even if there are some great value opportunities going by on your personal radar.
My takeaway? The same as it’s been for most of this year. Heed the warnings of bearish strategists, but do so with a very fine grain of salt. There are bullish pundits out there today, including the likes of JPMorgan’s Marko Kolanovic, who believes markets will continue trending higher into year-end.
Kolanovic is a bright guy, and his view goes against many of the bears that have come out on the Street these days. Could Kolanovic be right? Could stocks continue marching higher despite all the negatives outlined by the bears? Possibly. I’d say Kolanovic’s bullish view is more plausible than those correction calls.
In any case, I think it’s a bad idea for investors to sit tight, waiting for a correction that isn’t even guaranteed to come. The real risk to investors is if the correction doesn’t hit until next year and inflation continues to rise, punishing those with too much cash in savings accounts. With the latest round of Canadian inflation numbers surging past 4%, it’s time to consider the opportunity costs of heeding bearish strategist calls.
While market strategists are some pretty talented folks, not even the brightest mind on Wall Street knows what the markets are going to do next, at least over the near term. Over the long run, markets tend to go up. And for that reason, bargains should be bought regardless of how “overdue” we are for a pullback.
Badger in a bear market
If you’re looking for a pullback, look to Badger Infrastructure Solutions (TSX: BDGI), a mid-cap Canadian company whose shares have already plunged by over 28% from their early 2021 peak levels. Badger had its fair share of margin issues, but it’s well-positioned to move on. The macro backdrop still looks good, and if management can show modest signs of improvement, the provider of hydrovac soil excavation solutions could really make up for lost time in the final quarter of 2021.
Badger stock popped 4.5% on Wednesday, now up 8% from its recent bottom. I think Badger is about to turn a corner, and the stock represents a deep value option for reluctant investors who are sitting on the sidelines for all the wrong reasons. There are bargains, battered stocks and all the sort that exist today. And they should not be passed up just because you heard someone saying a correction is near.
As an added bonus, Badger pays a 1.75% yield, which is yours to collect regardless of what markets do moving forward.
