Stock market rout 'an opportunity to buy' for long-term investors: strategist

Sylvia Jablonski, CIO and Co-founder of Defiance ETFs, joins Yahoo Finance Live to discuss opportunities for investors to buy stocks on the dip, how the market is pricing in interest rate hikes, the Fed, cryptocurrency, and the NFT market ahead of web3.

Video transcript

- --joining us now with more on this. Sylvia Jablonski, CIO and cofounder of Defiance ETFs. Sylvia, great to have you here with us today. H-Help us contextualize this move and especially what may be in play even prior to the major earnings that are set to be reported this week as well as the Fed and their decision.

SYLVIA JABLONSKI: Hi, good afternoon and great to be here with you today. Well, I-- you know, I think that there's a lot of uncertainty in the market right now. And you can sort of go down the list. We have the Fed meeting, you know, what will happen with the taper and unwinding of the balance sheets, and how far rates will rise and when.

Those are major issues, and have hit the panic button for the market. I think we've seen a lot of selling to meet margin recently. We have the news around Russia. And, you know, the US services IHS manufacturing number didn't look very good either. It's to an 18-month low. So you know, all of these things are impacting the market in the short term.

And I think what has happened historically is that a lot of the buyers would sort of come in and push us back up. And we would kind of revert to a higher mean than this one. But if you look back at the market, and you look back since World War II, any time that we've seen 10% to 20% pullbacks, which has been about 26 times, the market pullback has lasted for about four months. The 5% to 10% moves have lasted for about a month.

So I suspect that we're going to be in a wait-and-see pattern. We're going to have this volatility. We're going to have this sort of uncertainty and fear with investors on the sidelines until we get more news from the Fed, and until earnings continue. But what that presents for me, is an opportunity to buy.

You know, I'm always kind of talking about buying on the dip. But as an investor with a longer term time horizon, if I liked Apple at 180, because I think it's going to 200 or 300, I certainly like it at sub 160. Your last guest talked about crypto. If I liked Bitcoin at 50,000, 60,000 per coin, I certainly love it here at 33,000. So you know, it's a good time for investors to think about getting in on some of these deals.

- On the issue around the Fed, I mean, we've had a month now for speculation to run rampant. And I wonder how much of these rate hikes you think are actually priced in. I mean, if you think about the pullback that we've seen so far in this month, how much of that is overdone, just given that we haven't heard directly from the Fed? And how much of that you think comes in line, once we actually get a statement come Wednesday, whether that is more hawkish or not?

SYLVIA JABLONSKI: I think that's a great question. And I think that's sort of the most important question of the week. So the way that I see it, it feels like the market is over pricing in rate hikes. And for the last couple of weeks or the last month as you said, we had a really good reason to do that. You know, inflation was running hot. But the market was also sort of running hot. And you know, companies are doing well. The consumer continued to spend.

But now all of a sudden, the picture is looking a little bit murkier. And I think what that does, is it gives the Fed some room and some flexibility. We've heard a lot of people say this, but it does seem to be sort of logically true that if we pumped all this money and liquidity into the markets at the heat of the pandemic to recover and to sort hold up the economy, well, now, when we're sort of seeing-- yes, inflation-- but then pull back in manufacturing, jobs are not fully shaken out. And the market is looking, you know, kind of in a panic mode.

You would think that the Fed would think about that and really consider the word placement this week in terms of the FOMC meeting. So yes, we're going to have rate hikes. But perhaps hearing that we will wait and see, and respond accordingly to the markets and the economy is what would kind of turn things around here.

- Sylvia you mentioned Bitcoin and that, if you liked Bitcoin at 50k, then you definitely like it at 34K, 33K even. And so with that in mind, what type of kind of, "hold on for dear life" propensity do you believe is in play here for so many of the asset holders of Bitcoin, and even of other cryptocurrencies that have taken it on the chin, quite frankly?

SYLVIA JABLONSKI: Yeah. I think what happens in this type of market volatility and these type of pullbacks, you sort of have two types of people. I think you have investors that bought in at higher levels, lower levels, dollar cost average, sort of whatever they're doing. But they understand that this is probably looking like a bottom or pretty close to one. And it would behoove you to sort of hang on long term, particularly if you don't need to take the cash out of the market or out of cryptocurrencies.

And then you have other investors that, you know, see 5% to 10% pullbacks. And they're just out of the market, whether it's strategically to recognize early tax losses or something like that, or it's just absolute panic. It's going to zero. I want to sort of cut my losses here. And I think the latter group is actually the larger group.

So what I would say is, if you are an investor in a lot of these assets, you know, you went into them knowing that they're risky assets. And yes, they've pulled back. If you're not comfortable adding to your position, you know, hang tight. Because the markets, historically, have come back. So it's not sort of all over.

And again, I would just really highlight the fact that-- Dave, your last guest said it as well. If you were looking for an opportunity to get in, I mean, particularly if you can tolerate the risk, and the volatility, and understand that it's likely to happen along the way with crypto, this is a good time.

- With that said, we should point out NFTZ here, your NFT-themed ETF. And this is something we talked about before about what the upside is long term. No question, regardless of what you said there, there's a lot of people today who are saying, well, I'm looking at the chart here. It doesn't look good over the last several months. Has your long-term case changed at all?

SYLVIA JABLONSKI: It definitely hasn't. I think that the ETF looks like tech stocks look right now, like semiconductor stocks do, you know, any sort of disruptive technology right now is anything sort of related, second, third cousin to the NASDAQ right now is just getting crushed. But if I look at the future and what I want to invest in, I want to look at secular growth opportunities. I want to look at innovation. I want to look at the themes of the future.

And when I think about that, it's Web 3.0. It's metaverse. It's NFTs. It's 5G. It's machine learning. It's cloud computing. And these are all themes that are very much on sound now. So I think that NFTs are where crypto was a decade ago. You saw these wild sort of swings in crypto. And you're going to see them in NFTs.

But the total addressable market is growing. The total interest is growing. And if you think about Web 3.0, you know, the most interesting thing about NFTs, is actually the technology behind NFTs. And we don't talk about that a lot.

But it's technology that can change the way that we live, work, and can automate so many things that are just absolutely mind blowing. And I think that's a reason to really consider the companies that are investing in the NFT space.

- All right. I long wonder about what we are all going to look like and engaging like in the metaverse. So we will see exactly how that pans out. Such a pleasure to have you here and get your insights on the day. That's Sylvia Jablonski, who is the CIO and cofounder over at Defiance ETFs. Thank you again for the--