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Buy Tech Or Brace For 'Epic' Downturn? 2 Pros Share Their Strategies To Play The Market

Jayson Derrick

Investors have multiple options at their disposal to navigate through market volatility. CNBC covered two opposing views on what investors should do next: buy the dip in tech or brace for an "epic" downturn.

Buy Tech

Technology stocks have been among the hardest-hit in recent trading volatility, but much of the damage over the past few weeks has been reversed, Newton Advisors President Mark Newton said during a recent CNBC "Trading Nation" segment.

The reality of a "tech-dominated society" may be overlooked by investors, and Apple Inc. (NASDAQ: AAPL) — the heavyweight of the group — should remain an industry leader for at least the next two years, he said.

Apple's stock, at just 15 times next year's earnings coupled with a 1.5 percent dividend yield, represents an opportunity that can't be found elsewhere, Newton said. But investors looking for other tech plays to "hide" in should take advantage of an ongoing rotation into "earnings-driven companies" in the technology sector, like semiconductors or cloud-focused, he said.

Related Link: Report: Apple Pulling Back On iPhone XR Production On Soft Demand

Trump 'Playing With Fire'

David Stockman served as the director of the Office of Management and Budget in the Reagan administration. He told CNBC the S&P 500 index could fall "well below" the 2,000 level, if not 1,500.

A recession is one if not two years away and comes at a time when some investors wrongly think the current "world of nirvana" can continue forever, Stockman said.

President Donald Trump is "playing with fire" when he criticizes the Federal Reserve to slow down the pace of interest rate hikes, the former federal official said. The reality is the Federal Reserve has been "dithering for eight years," and the current Funds rate of 2.13 percent is below inflation, Stockman said.

The ongoing trade dispute with China could end up impacting the entire U.S. economy, since China exports around 30 percent of the goods in categories the American economy imports, he said.

If it is any comfort to investors, Stockman said his 40-percent downside outlook isn't as steep as the 55-percent correction the S&P index suffered in the most recent recession and the 80-percent plunge the Nasdaq index saw in the recession prior.

"Somehow there is just no memory on Wall Street, because it's kind of trade by the minute and the hour," he said.

"The chart monkeys are trying to find the 200 [daily moving average]. That doesn't explain where we are going to be next year or the year after. We are going to be in a recession and we are going to have another market correction which will be pretty brutal."

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