In the wake of the surprise Brexit vote, markets around the world have been tumbling. The S&P 500 (^GSPC) has gone from 2,113 on Thursday before the votes were counted to 2,000 on Monday, a 5.3% drop in just two trading sessions.
Most strategists on Wall Street are recommending clients to think twice about pouring money into this market.
"Don't be a hero yet," Barclays macro strategist Ajay Rajadhyaksha said.
"Beyond Brexit, we believe there are other reasons to be cautious on US equities given the multitude of risks that do not appear to be priced in," Bank of America Merrill Lynch's Savita Subramanian warned. "(i) pullback in oil prices, (ii) deteriorating credit trends, (iii) a potential Fed hike later this year, and (iv) what is likely to be a heated election season."
Deutsche Bank’s David Bianco identified similar concerns while recommending: “Stay tactically cautious on either UK vote result: Next 5%+ move is likely down."
This is the type of stuff that's right in line with the gut feelings shared by most investors who've enjoyed the bull market, which is in its seventh year.
Some pros are recommending something clients don't want to hear
However, some Wall Street pros believe it's a mistake to wait for the dust to settle.
"Investors are scared, and probably want to hear portfolio managers echo their fears," Richard Bernstein Advisors' Richard Bernstein said. "It sounds quite smart right now to say one should be cautious, that the environment is unprecedented, and that taking risk is foolish given extreme uncertainty. However, we think joining that chorus may be a disservice to our clients. We prefer to dispassionately review and interpret the data, and invest using [our firm's] risk-averse, contrarian strategy that has been successful over many market cycles, many economic cycles, and many highly unusual macro events like Brexit."
History shows that some of the best times to buy stocks are also uncomfortable times to buy stocks. Indeed, long-term thinking investors have a long track record of being rewarded for weathering uncertain times.
"In the near-term, one cannot fight the valuation headwind coming from uncertainty," Fundstrat Global Advisors' Tom Lee said. "But we believe this pullback will ultimately need to be bought."
At the very least, investors should be selective when they go out and buy.
"For intermediate- and longer term investors, know what you own and why you own it, with reasonable expectations as to how your investments could perform in various scenarios,” Oppenheimer’s John Stoltzfus wrote. “If so inclined, investors should consider pullbacks as a time to make shopping lists of desirable opportunities as well as time to seek “babies thrown out with the bathwater” during market volatility. Market pullbacks serve to remind us of the age-old adage ‘buy low, sell high.’”
"[B]loodied but unbowed, buy the dip," UBS's Julian Emanuel said.
This opportunistic thinking is not for everyone. And so many people — in hindsight — find themselves regretting what could've been.
"Scaling cliffs of concern tends to be a rewarding experience but it may require a gut-wrenching decision to buck the popular discomfort of uncertainty," Citi's Tobias Levkovich said.
Sam Ro is managing editor at Yahoo Finance.