Money Managers See Stock Selloff on Govt Shutdown as Buying Opportunity

Tuesday, 08 Oct 2013 09:19 AM

By Dan Weil

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If the stock market keeps dropping on concern over the government shutdown, money managers anticipate jumping into the market.

The Standard & Poor's 500 Index has fallen in 10 of the last 13 sessions, but is down only 3.1 percent from its Sept. 19 record high.

The government shutdown could stifle economic growth and corporate earnings, but most experts don't think it will last long enough to cause a recession.

Editor’s Note:
New Video: Obama Plans to Redistribute Seniors’ Wealth

So further stock declines would represent a buying opportunity, money managers tell The Wall Street Journal.

"We are looking to take advantage of it [the government shutdown] if it drives turmoil in the markets," Bruce McCain, chief investment strategist at Key Private Bank, tells the paper.

There is also the issue of the debt ceiling. If it's not raised by Oct. 17, the Treasury Department says that it won't be able to pay all its bills.

Because of the possibility of a debt default, many experts anticipate Congress will lift the ceiling before then.

"We just believe the odds of lasting economic damage are very, very minimal," McCain maintains.

If stocks fall another 2 percent, Richard Steinberg, whose Steinberg Global Asset Management oversees $600 million, says he would be a buyer in the stock market, as he doesn't expect any long-term economic damage.

"We are hoping to pick up some bargains on any weakness," he tells The Journal.

"We don't see an apocalyptic event. The way we view it is we are watching a train wreck in slow motion, but eventually there won't be a crash," Steinberg adds.

But some market participants are worried. "I think investors are trying to feel their way through this,” Walter Todd, chief investment officer at Greenwood Capital, tells Bloomberg.

"Each day that it goes by without any type of solution or any hope of a solution, the market gets more and more concerned about what the ultimate outcome is."

Editor’s Note: New Video: Obama Plans to Redistribute Seniors’ Wealth

Related Stories:

Wall Street Falls as No Progress Seen to Resolve Shutdown

Economist Wesbury: Talk of Default a 'Scare Tactic'

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