Investors looking to scoop up deals and position themselves for long-term growth should act now instead of waiting for stocks to bottom, David Rubenstein said Wednesday.
“People shouldn’t be afraid of going in and buying things now,” The Carlyle Group co-founder said during CNBC’s Delivering Alpha Investor Summit in New York City. “The great fortunes in the investment world are often made by buying things at discounts.”
During the past decade or so, there haven’t been many discounts with the U.S. stock market being in a bull cycle. Now, however, stocks have fallen into a bear market and have remained volatile, meaning many names are trading at a relative discount, Rubenstein said. The S&P 500 is down more than 15% year to date through Tuesday’s close and off more than 23% from a record set in January.
Rubenstein sees good value in stocks now and continuing through the next six months — about the time he thinks it will take for Federal Reserve rate hikes and policies from Congress to start making a dent in inflation.
He also noted that investors should start buying now rather than try to time the market bottom.
“It’s a fool’s errand to find the bottom in the market or the top in the market,” he said. “Trying to wait to the absolute bottom is probably a mistake, in my view.”
Rubenstein said the market is much closer to the bottom today than it is to the top. He doesn’t see stocks falling another 50% or 25% from current levels.
But not everyone is as sanguine as Rubenstein about stocks today. Paula Volent, Rockefeller University vice president and chief investment officer, said during Wednesday’s event that the macro environment is “very scary to me,” pointing to issues arising from Russia and China.
She noted that her cash allocation now is the highest it’s been at any point in her career.
Still, for investors that want to take advantage of the market, she recommends active management. “You have to find active [management] and you have to go into thematic areas where you can generate some returns,” Volent said.