Is It Safe to Buy Stocks Again?

Jeff Macke

With the markets trying to recover from the most vicious summer sell-off since all the way back in 2010, there's one important question facing those investors: Is it safe to buy stocks again? Jon Fisher, a portfolio manager with Fifth Third Asset Management says yes, sort of.

Fisher says Fifth Third upped its cash levels on August 1st and 2nd due to concerns over the nature of the debt ceiling debate. While it was the right move, not even Fisher expected it to be so right, so fast. Given the speed of the whoosh, and subsequent bounce, he's "not willing to force money back into the market" until we get closer to the October earnings season.

His logic for waiting it out until Autumn is two-fold:

1) He and the Fifth Third posse thinks the forces driving the market lower had little to do with the actual businesses themselves but rather talk of recession, unemployment, and buffoonery in Washington, D.C.; forces capable of wreaking havoc with even the most well-picked stocks.

2) Fisher thinks the earnings for this quarter will still be strong enough to drive equities higher, but not until investors get a chance to see Q3 results firsthand.

Splitting hairs or engaging in a bit of hedging, Jon thinks stocks end the year higher than the current levels, they're just going to get higher the hard way. The "probability is greater than 50%" that the tape tests recent lows of around 1,100 on the S&P 500 and even "go a little lower." That test of the lows is your buying point, according to Fisher.

If and when we retest those levels, Fisher is looking at familiar blue chips like Apple (AAPL), McDonald's (MCD), Amazon (AMZN), and Coca-Cola (KO). In the portfolio manager's view these companies are as close as investors can get to cash-flow generators, market-share takers and earnings winners.

You can hear Fisher's thoughts on Google's (GOOG) deal to buy Motorola Mobility (MMI) and whether it impacts his view on Apple in our Breakout interview posted yesterday.

In the interest of full disclosure, I own McDonald's and bought more during the market swoon last week.

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