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$9 billion money manager bets on dramatic comeback, takes cash off the sidelines


Money manager Bill Stone is betting on a sustainable market comeback.

He’s putting new cash into stocks despite unknowns related to the coronavirus outbreak and this year’s presidential election.

“Once we even got down 5%, got down 10%, we’ve continued to leg in more money for clients as we’re moving towards their long-term asset allocation for stocks,” the Avalon Investment and Advisory chief investment officer told CNBC’s “Trading Nation” on Wednesday. “When people are so negative, there is a lot of opportunity that things can move up.”

Some believe a meaningful rebound is starting to unfold.

The Dow, S&P 500 and Nasdaq just exited correction territory, which reflects a 10% or more drop from 52-week highs. 

And, the Dow made history again this week. On Wednesday, the Dow jumped 1,173 points or 4.5%. It’s the index’s second highest point gain ever, just behind Monday’s surge. Plus, it’s the second time in 72 hours the Dow closed more than 1,000 points higher.

Stone, who manages $9 billion in assets, has been positioning for a temporary pullback since late last year. He increased a cash stock pile as the market was hitting new highs due to buoyant investor sentiment.

“It wasn’t that we sold a lot of stocks or anything like that. We held back some dry powder,” he said.

It’s a move that may pay back big time.

Investing on behalf of high net-worth and ultra-net worth individuals, he’s bargain hunting.

“You try to take advantage of these kinds of opportunities,” he said.

His S&P 500 year-end price target is still a bullish 3,675, an 8% increase from the index’s all-time high.

Despite his optimism, he acknowledges widespread selling may reemerge. Indeed, in Thursday’s premarket, all three major stock indexes were pointing to drops of more than 1.5%

“In the short run, there may be other spots like utilities [and] real estate that will probably do well in the interim because of the less risky characteristics,” he said.

For the longer-term, Stone particularly likes beaten down cyclical groups including technology and consumer discretionary. Since the correction started in mid-February, they’re both down 8%.



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