Oppenheimer told CNBC that the sell-off in equities alongside bonds had come as a surprise, with Goldman Sachs reiterating several buy recommendations this year for equities. Oppenheimer himself penned a report titled "The Long Good Buy; The Case for Equities" last year describing stocks as a once-in-a-lifetime opportunity."
We didn't anticipate this particular transition that we are seeing at the moment. What we did believe is that at some point bond yields would rise. We felt that the initial stages of bond yields rising would be actually be accompanied by rising equity prices because both would reflect an increase in growth expectation." he said, adding that investors are currently deciding which assets have become overvalued and this move lower will be temporary.We believe the next phase for equities will really be driven by fundamental profit growth as opposed to valuation expansion.""With mounting threats of QE exit and a China slowdown, the outstanding rally in equity markets might come to an end," Vincent Cassot, a derivatives strategist at Societe Generale said in a research note on Monday.
"We advise investors who still see some upside potential to engage in an active stock replacement program - selling stocks and replacing them with calls. It will allow them to secure the gain and keep some upside exposure while leveraging the cheap volatility environment."
"The stronger the correction, the sooner it is likely to end. From an economic standpoint, investing in equities is likely to prove worthwhile again only towards the end of the third quarter of 2013]," the bank said in a research note on Friday.
"But as the exact timing is impossible to predict and expected returns are disproportionately high one year ahead, investors who wish to purchase equities should react sooner rather than later. As interest rates remain low, the hunt for yield continues and the growing demand for equities means that corrections are likely to be frequent but short-lived."
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