The stock market recovery will take longer than it did after the 2008-2009 financial crisis and things will remain painful this year, a money manager said in a Natixis online conference today.

“Earnings will be decimated in 2020,” predicted Bill Nygren, chief investment officer of U.S. Equities at Harris Associates and manager of Oakmark Fund. In the meantime, there will be many opportunities for value investors, he said.

The market will not quickly snap back because we are in a “severe recession” this year and will not return to normal in 2021, he said. However, in 2022 the market will be strong again, Nygren said.

In 2022, price earnings ratios will be 20 for a high-quality business and 15 for an average business when markets return to normal, he said.

Where can one find value now? Financials are well positioned to come back, he said, while entertainment, tourism and restaurant companies are facing big problems.

“Where the market decline has been much too severe has been in the value names, especially in the financials,” he said. Nygren said some of these stocks have gone down by about 50%.

Allied Financial has a book value of $30 a share but is trading at $15. It may not have any earnings this year, but it should see strong earnings by 2022, he said.

Financials have taken a beating, but they're in a better position to bounce back than they were 12 years ago, he said. “Compared to a decade ago, a severely adverse situation doesn’t put them into a position to where they are bleeding capital,” Nygren said.

Nygren said many financials are now a bargain. He said the average bank, which was in the “eye of the storm” in 2008 because some in the industry had sleazy products and were too aggressive in pushing housing properties, generally is not compromised this time.

“Today they have much more capital than they did,” Nygren added, “and they have much higher quality loans.”

He said value investing is inevitably going to come back. But he said the nature of the investing style is “you try to look out beyond what is happening today and try to look out to what is going to happen several years from now.”

He said his firm’s view is that two years from now global GDP will be back to what it was a month ago and oil demand will be back to what it was in 2019 and 2020.