(Markets Insider) Bank of America analysts say that historically, dips in equities caused by geopolitical tensions are buying opportunities, as stocks bounce back quickly.
The analysts say the geopolitical shocks induce declines of between 7% to 8% in the S&P 500 index. They say that in the current Ukraine war, the index has already hit the peak-to-trough fall of around 9%.
The BofA strategists say that historically, shocks without fundamentals and long-term impacts offer buy opportunities, with stocks recovering more than fully in just three months.
The strategists say the current dip is already overdue, pointing out that the average correction occurs once a year and lasts for around 54 days before posting a 10% bounce.
BofA now says investors should adopt a longer time horizon to avoid missing out on the opportunities due to panic selling over the ongoing geopolitical tensions.
The note by BofA comes amid panic selling due to the heightened uncertainty in Ukraine. Some analysts, including top economist Mohamed El-Erian have advised investors against buying the dip, even as retail interest remains strong.
