‘We like these prices’ — Morgan Stanley’s Mike Wilson sees best ‘risk-reward’ market in 2 years

Investing

Mike Wilson, Chief U.S. Equity Strategist and Chief Investment Officer at Morgan Stanley.

Adam Jeffery | CNBC

Investors should be taking advantage of the market’s steep coronavirus-driven sell-off from February highs, Morgan Stanley‘s Mike Wilson told CNBC on Thursday. 

“We’ve been scaling back into stocks over the last two, three or four weeks. We’re not going to catch the bottom exactly,”  the firm’s chief U.S. equity strategist said on “Squawk Box.” “We think this is probably the best risk/reward we’ve seen for investors in two years.” 

Wilson, who had been among Wall Street’s most bearish strategists, had been arguing often that stocks had become stretched last fall and into 2020.

But now the S&P 500 has fallen into bear market territory, sitting as of Wednesday’s close around 27% below its Feb. 19 highs. While Wall Street is coming off back-to-back daily gains for the first time since last month, Wilson said investors should focus on the relative price of assets, not whether they have reached their bottom. 

“No one is good enough to call this stuff to the day and to the dollar,” he said. “If you have real assets to put to work … you need to be thinking about, is this is a good price? Do I like this price if I’m investing for the next 6 to 12 months?  And we do. We like these prices a lot.”

The prices are attractive “particularly in some of the credit markets, particularly in some of the higher quality equity markets, and even in some of the lower quality equity markets,” Wilson said. 

Wilson said last week the U.S. was in an “equivocal” recession due to the economic shock from the coronavirus and oil price collapse, but he argued Thursday it will not last very long. 

“We’re leaning more toward kind of short and sharp because the policy response we’re getting is so dramatic,” Wilson said. “The market is going to look straight through this valley because it already went down 35% on average,” he added. 

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