Long-term investors can look beyond current market turmoil as stocks could gain up to 12% in the next few months, a Wall Street investment chief says

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  • Morgan Stanley Wealth Management’s investment chief told Bloomberg on Wednesday that long-term investors should look beyond the current market turmoil because a V-shaped recovery and market gain of up to 12% in the next few months is still likely. 
  • “At the minute we have this confluence of rising surging cases and the lack of CARES 2.0, and I think the longer that stalemate is occurring, the risks increase that we can have an economic stall,” said Lisa Shalett. 
  • “But right now, we’re still betting on that V-shaped recovery because we do think that if we get some stimulus in a lame duck, that will be soon enough … to keep the momentum going,” she added.

All three major US indices fell nearly 3% shortly after the opening bell on Wednesday, but Lisa Shalett is telling long-term investors to look past the current market turmoil. 

The Morgan Stanley Wealth Management chief investment officer told Bloomberg that the market could still gain 12% in the next six to nine months if fiscal stimulus is passed after Election Day. Therefore, investors with that outlook time frame should be adding cyclical stocks that will gain in the long term, Shalett said. 

“At the minute we have this confluence of rising surging cases, and the lack of CARES 2.0, and I think the longer that stalemate is occurring, the risks increase that we can have an economic stall,” said Shalett. “But right now, we’re still betting on that V-shaped recovery because we do think that if we get some stimulus in a lame duck, that will be soon enough … to keep the momentum going.” 

Read more: Morgan Stanley pinpoints 18 real-estate stocks that are beating the market this year even as the broader sector underperforms – including the sub-sectors benefiting from the coronavirus crisis

Shalett also said she’s continuing to see high frequency data in the US demonstrate a “grinding improvement” in the economy. Durable goods orders rose 1.9% in September for the fifth month in a row, soaring past consensus estimates of 0.5%. Consumer confidence dipped to 100.9 in October from 101.3 in September, but Shalett said the number is still high.

“The odds continue to favor a market that is materially higher from where we are and could be as much as 10 to 12 percent higher than we are right now,” added the CIO.

The S&P 500 fell 2.9% during intraday trading on Wednesday for its third straight day of losses.  The Nasdaq lost as much as 3.2%, while the Dow slipped 3.2% in its fourth day of losses.