See uncertainty in May, be stock specific: Richard Ross

Global stocks and the euro fell on Wednesday after weak data on Euro zone manufacturing and US private-sector hiring fueled concerns about a global economic slowdown.

In an interview to CNBC-TV18, Richard Ross, Auerbach Grayson says, May should be a month of uncertainty not necessarily a 'sell in May and go away', but one to keep some dry powder for better buying opportunity ahead. He further says, there are going to be winners and losers despite this macro backdrop. "Bottom-up approach, stock specific investing is still the way to make money, it always has been and it will be going forward," he adds. Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video. Q: The markets have a way of making us eat our words. Just yesterday we were talking about how May may not be the month to sell and go away. Today’s data puts a different spin on that. A: It certainly does. One of the things, we highlighted yesterday, was our expectation that volatility would pick up. Infact we have already seen that volatility increase. Yesterday, we saw a little bit of a reversal. And then we came in this morning, we got some disappointing data points on the economic front, continuation of the erosion, the situation in Europe and that took US markets lower. Interestingly, we have a nice bid in US, investors have come in, they have bought that weakness. We are almost done changed here on the S&P 500 as you alluded to. So, once again volatility picking up, May should be a month of uncertainty not necessarily a ‘sell in May and go away’, but one to keep some dry powder for better buying opportunity ahead. Q: How do you play the data from here onwards? There are signs of weakness, the weakness could persist over the next few months, may be even the second half of the year, how do you expect equities to respond to the signs that are coming in from the data? A: One thing that I do tell investors is we have had so much of this focus on the macro backdrop over the past 18 months or so, looking at these big global trends across Europe, emerging markets and developed markets, but there are still a lot of money to be made in individual securities. As they say ‘it’s a market of stocks not just the stock market’. That’s what we would encourage investors to do. There are going to be winners and losers despite this macro backdrop if you will. That’s what we would like to do. Bottom-up approach, stock specific investing is still the way to make money, it always has been and it will be going forward. Q: I could surmise that you have had a relatively strong earning season in the US, haven’t you? So, weak data but a strong earning season, that makes it that much more difficult to play this market, right? A: It does. That creates opportunities both on the long and on the short side or at the very least to get out of your positions. When the price action in the fundamentals start to diverge, that’s when the shroud investors get in there, they take advantage of those mispricing and the inefficiencies in the market. You know there is always going to be that debate how much of this good earning season is factored into the stocks at these levels. We have had an extremely nice advance over the past six months. So, should be really interesting as we head into the summer. Once we get out of this earning season, what's the next big catalyst is? What's the next big headwind? What's going to get this market going?