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Market bull John Stoltzfus: U.S. is best place to invest, cites less ‘froth’

Despite the market’s wild swings, Wall Street bull John Stoltzfus is encouraged by what he’s seeing in the markets  and economy.

Stoltzfus is putting money on it: He’s overweight U.S. stocks.

“The U.S. is outperforming most of the markets around the world — whether it’s developed markets or emerging markets,” Oppenheimer Asset Management’s chief investment strategist told CNBC’s “Trading Nation” on Friday.

However, it’s hard to ignore the tough month.

Pullbacks have been hitting the major indexes almost daily. The S&P 500 is off more than 7% while the Nasdaq is off almost 11% from their all-time highs hit on Sept. 2. Now, they’re on a three week losing streak.

“We’ve taken out the froth that had come into the market in certain [mega cap] names,” Stoltzfus said. “It may be a good opportunity to pick up some really good, high quality growth stories that are on sale right now.”

His optimism is buoyed by the Federal Reserve’s unprecedented polices to support the market and interim rallies during the pullbacks showing a broadening to include economically sensitive stocks.

But it also hinges on Congress passing a second coronavirus aid package to help Americans, which has been stuck in heated negotiations.

2020 plot twist

Stoltzfus came into the year as a bull, too. But due to surging uncertainty surrounding the coronavirus pandemic, he suspended his S&P 3,500 year-end price target on March 23. 

In a 2020 year plot twist, the S&P eventually exceeded his target, and closed at a record 3,588 on Sept. 2. According to Stoltzfus, it’s conceivable the index could rally back to that level based on improving economic data, advancements on a vaccine and a presidential election outcome that won’t hurt Wall Street or Main Street.

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“You want to see a result that comes out of this that is friendly to the taxpayer. That’s friendly to business, That’s friendly to creation of jobs — overall a good story for the economy,” he said. “Anything that challenges that will likely see the markets continued to show nervousness.”

But ultimately, he sees setbacks containing the pandemic as the most worrisome market risk.

“The biggest nervous issue is just this resurgence of Covid that we’ve seen around the world now,” Stoltzfus said. “That’s the real challenge.”

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