00:00 Speaker A
What should investors be doing here? I know that you were looking at some of the highly rated CFRA stocks as places maybe to go while people are, you know, maybe can put aside what’s going on a little bit. CME is one of them. Um, you know, and I guess, you know, there’s with a lot of volatility in the market, that can be good for places that, you know, trade for living effectively.
00:42 Sam Stovall
Sure. Well, what I was doing was looking at those groups that have performed well since the March 13th bottom, because I looked at the speed with which the market declined a little more than 10% to fall into a correction territory and looking at all declines of 10% or more going back to World War II, I found that if it was a fairly swift decline, it typically ended up being a very shallow decline that then was followed up by a fairly swift recovery to break even and beyond. So I was looking at those groups that had been beaten up, but also where we have favorable technical and fundamental forecasts. CME Group was one of those, mainly we liked the fact that both open interest and client acquisitions have not been appreciated in our opinion by the investing community and the company trades at a discount to its historic averages as well as its peers. So the financial stocks we think should do fairly well.
02:40 Speaker A
Are there sectors, Sam, you would avoid here?
03:02 Sam Stovall
Well, interestingly enough, Josh, what typically happens after a correction is that the worst performing sectors are the ones that tend to take the lead. Consumer discretionary was down 16% during this correction, technology down 14%. Not surprisingly, they are the best performers on the way out. Uh conversely, those safe havens, consumer discretionary, healthcare utilities are the ones that investors rotate from in order to go into those groups that had been beaten up. So we’re still indicating that we think that if we get a rotation back into growth, they’re going to be leaving the defensives behind.
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