– By Stepan LavroukEver because the turmoil earlier this 12 months, the U.S. stocks markets have been on a relentless upward march, with each the S&P 500 and the Nasdaq making new all-time highs. Nonetheless, because the begin of September, each of those benchmark indices have undergone a substantial pullback, prompting some hypothesis that the highest of the market might need already been reached. A current analysis notice from Morgan Stanley’s (NYSE:MS) fairness division mentioned whether or not this correction ought to trigger buyers to be anxious in regards to the state of the market.Only a bump within the roadMorgan Stanley’s fairness analysis division, led by Chief Fairness Strategist Mike Wilson, triggered some skepticism earlier this 12 months when it introduced that the March monetary crash would mark the start of a brand new bull market, however up to now, it is onerous to seek out fault with their thesis. Wilson sees the September slowdown as a traditional bull market pullback. To help this viewpoint, the notice factors to the truth that the stocks which have led the current pullback are the exact same stocks that benefited essentially the most from the imposition of lockdowns – the know-how sector. The Nasdaq is at present buying and selling down round 7% from its current all-time excessive. It’s due to this fact maybe unsurprising that the costliest stocks have skilled the most important valuation corrections.If Wilson is correct that that is certainly only a bump within the highway for an already costly market, then that introduces a tough conundrum for buyers: ought to they make the leap to keep away from lacking out on future positive factors, or ought to they anticipate a greater entry level? Political threat continues to weigh closely on these discussions, as each the passage of a congressional fiscal deal and the end result of the U.S. presidential election are at present huge uncertainties. The notice recommends that buyers commerce fastidiously round these occasions and concentrate on much less glamorous sectors:”We stay targeted on stocks and sectors that can exhibit essentially the most working leverage subsequent 12 months because the financial system continues to reopen. This leads us to smaller capitalization stocks within the supplies, industrials, monetary, and shopper discretionary sectors. One space particularly to remember is shopper providers, issues which you could’t eat or expertise as we speak as a result of that a part of the financial system stays successfully closed. Some examples embody journey and leisure, eating places, and constructing actions. Lastly, I have been highlighting financials as one of the simplest ways to take part in rising long run rates of interest that ought to happen as soon as we get by means of the congressional deadlock on fiscal spending and the election is concluded. Backside line, be affected person and selective with new purchases over the subsequent few weeks and months”. In fact, value buyers shouldn’t be involved about lacking out on positive factors in an overheated market, and as a substitute ought to concentrate on trying to purchase cheaply priced property with a large margin of security. Take care of the draw back and the upside will finally take care of itself. Disclosure: The creator owns no stocks talked about.Learn extra right here:Not a Premium Member of GuruFocus Join a free 7-day trial right here.This text first appeared on GuruFocus.