In their worst week since the financial crisis over a decade ago, the Dow lost 11.4% this week while the S&P 500 lost 12.3% as fears of global viral contagion is pervasive. But despite the severity of the issue, billionaire Ken Langone feels the panic may be overdone.
Langone, who is best known for organizing financing for the founders of The Home Depot, says this is more of a scientific issue than a political one.
“This is a scientific challenge not a political issue. And I am comfortable that the best minds, the best scientific minds, in the world right now, in this particular area are focusing on it. I think it’s a serious issue. I think it’s an issue that we have to be diligent with. But on the other hand when you look back in times past, whether it was the HIV of the early nineties, whether it was Ebola, SARS, you go right down the list. I think that we everything that’s being done right now should be being done, And more importantly I think that the public is conscious of what it can do,” Langone said on CNBC.
While Langone acknowledges the severity of the coronavirus, he feels the panic in stocks is overdone.
“I’m not suggesting that this is not a serious issue, but I’m saying to you that as far as I can see from the standpoint of the stock market, the reaction far far surpasses the issue,” the billionaire added.
So given that stocks are still something to consider in Langone’s opinion, where is the best place to invest? He sees dividend yielding stocks as a place to explore, as opposed to traditional safe havens like bonds, which offer little in the way of return.
“I would rather own a high-quality company that yields a 2, 2 1/2, 2 3/4% dividend then buy a long-term bond, where I know I’m pretty much signing up for losses. So I think it’s a time to be cool. I think it’s a time to be rational ,and I think certainly it’s a time to make certain that all leaders, all sides, all parties get off the issue of politics and get on the issue of science, and by the way that includes the media as well. I think this hysteria is being fed by the media,” Langone explained.
The ProShares S&P 500® Dividend Aristocrats® ETF (NOBL) is one option for investors looking to follow Langone’s advice. Many investors have come to expect outperformance of dividend growth strategies during periods of market stress.
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