Stifel Nicolaus: Market Selloff Going To Continue For A Month Or So

The U.S. equity markets opened significantly lower for a second day in a row. However, they recouped more than half of their losses during the afternoon. Stifel Nicolaus Market Strategist, Kevin Caron, was on Bloomberg TV recently to discuss how long will this selloff continue.

Going To Stay For A Month

Caron was asked if this market selloff is going to continue for some more time. He replied, "I think, it's going to be with us for a month or so, which in my view is short-lived. What we saw a year ago was the fact that when we looked at a broad range of economic indicators, we saw a slowing in the global economy. We have been more conscious on our equity allocations all throughout the year and China's moves just confirms that that economy is still weaker than what had been expected."

Caron continued, "So, that below 7 percent kind of growth number is becoming more realistic as a number for China. And what it means is that the expectation for returns this year would be flatter. And indeed what we see [or] equity markets that are basically flat here in the United States for the year."

Tortoise Is Going To Lead The Rabbit

On where he is advising clients to invest their money, Caron said, "On the equity side what we have done is we have looked for places where we can move up the quality spectrum. Really since mid-2012, the higher volatility, higher beta, more torque, if you will, equity issues have really led the market and this tends to move in cycles where the rabbit leads the tortoise."

"We think that the tortoise is now going to lead the rabbit to some extent and so for the last six months or so we have been collecting more companies in the portfolio that have those kind of more steady characteristics. And then as far as our asset allocation portfolios are concerned, we have been underweight equities since last year and shorter in terms of our duration on the bond side," Caron concluded.