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Don’t Fall for the Pullbacks, Now’s the Time to Buy: Haverford’s Smith

Pras Subramanian

Short-term pullbacks due to false tweets aside, some market watchers will tell you that like a spring shower, a small market dip every now then tends to refresh a bull market. Others see a potential pullback as a dark cloud or sign of a deeper downturn correction.

One money manager who sees a buying opportunity in the face of strong year-to-date gains is Hank Smith, chief investment officer at Haverford Trust. As for that slight pullback that spooked investors at the start of the second quarter, Smith points out, “I don’t think anyone should be surprised, markets don’t go up in straight line," he says. "If we do have a [another] pullback or correction, it won’t take away the case that we are in a long-term bull market, we are not in a cyclical bull that's part of a secular bear market.”

The market has erased losses incurred earlier in April, taking the S&P 500 (^GSPC) back to flat for the month. The bullish case that Smith sees for the current market going forward is contrarian, namely that “we are a long, long, way from optimism and euphoria; we are still in the skeptical and anxiety phase of the market in terms of psychology, plus we think the fundamentals look reasonable in here.” This leads Smith to unequivocally state that he’s buying.

In his view, savvy investors looking for that perfect dip in the market may be playing it too cute. There is still plenty of money on the sidelines that retail investors have been afraid to put back to work in the market, Smith says, and these investors have now missed out on some huge gains.

Like the old hockey adage that says you can’t score if you don’t shoot the puck, investors “can’t keep sitting on the sideline earning nothing.”