February Sell-Off a 'Squall'

However, she noted, it is a reminder that, on any given day, you can have a constellation of emotions that can lead to a sell-off, she said, speaking at a presentation at The New York Stock Exchange Friday.

The U.S. is at an inflection point, Krosby noted; every piece of data happens to be a reflection on the economy, and the data seem to suggest the economy is slowing down. However, she commented, there is still a solid underpinning; earnings are now adjusting and people are waiting to see how much consumer spending will slow.

Asset Class Opportunities

During a sell-off, everything is sold, Krosby said, it generally is not favorable to a particular equity asset class.

People needed liquidity on that day, so they sold things that they had made gains in, or that were easily liquidated, commented Karen Grimes, Vice President and Equity Portfolio Manager, Wellington Management Company, LLP.

So, although all equities lost ground on that day, Krosby said, she believes that large caps, both U.S. and global, will outperform moving forward, while there is still risk in the market.

Risk began coming into the market last year in February, in advance of the sell-off in May 2006, Krosby explained; at that time, she said she advised people to move to large caps, especially U.S. large cap, and away from emerging markets, as well as small and mid-cap strategies. However, as risk aversion comes down, you’ll start to see money go into small and mid-cap equities, she said.