An 8% decline from a stock-market high “isn’t the sort of noise” to prompt investors to put fresh cash to work, Barry Ritholtz, the co-founder, chairman and chief investment officer of Ritholtz Wealth Management, said Tuesday.
Ritholtz, speaking on Bloomberg Radio, said the current economic environment doesn’t feel recessionary but suggested current Trump administration policies will take 10% off corporate earnings.
Investors should look into picking up stocks when the CBOE Volatility Index is over 30 or 35, he said on “Bloomberg Surveillance.” The VIX recently stood around 27.5.
“We were priced for perfection. This is not perfection,” Ritholtz said, adding that the stock market isn’t showing signs of capitulation yet.
Ritholtz’s firm had told investors that two back-to-back years of market gains topping 25% “means that you should dramatically reduce your expectations” for 2025.
Addressing Berkshire Hathaway Chairman and CEO Warren Buffett’s cash hoard of more than $300 billion, Ritholtz said, “Warren doesn’t move to cash that often but when he has it certainly has been fortuitous,” including in the late 1990s and in the run-up to the great financial crisis.
Ritholtz noted that all Magnificent 7 mega-cap tech stocks except Meta are negative year to date, and that Buffett has reduced his company’s Apple holdings.
Ritholtz is among several top market strategists offering their views on the recent downturn. Here are others:
Ryan Detrick, Chief Market Strategist, Carson Group
"The stock market is the only place things go on sale and everyone runs out of the store screaming,” he posted on X, formerly Twitter, on Monday.
On Tuesday, Detrick posted again, saying Monday was the worst day of the year for the S&P 500 at -2.7%. Even the best years usually have a bad day, however, he explained. In years when the S&P 500 gained over 20%, there were 22 “bad” days, with the average worst day being -3.5%, he said.
“1997 had a 6.9% worst day and still gained 31% for the year in fact.”
Among the key bullish takeaways from a Carson Group podcast last week with Detrick and Sonu Varghese, global macro strategist: Stocks have pulled back due to new tariffs on Canada, Mexico and China, but history shows that early-year volatility in a post-election cycle is normal.
They also suggested that the first quarter in post-election years tends to be choppy, but historical data suggests a stronger market performance in the coming months.
Peter Mallouk, President and CEO, Creative Planning
“The S&P 500 is down over 8% from its February closing high,” he posted before the market open Tuesday. “Over the last 75 years, the average intra-year market drop has been close to 14%. If you are overly stressed out about your portfolio today, the stock market isn’t for you.”
He included a chart showing a 13.6% average intra-year drawdown from 1950 through last year, with 11.6% average annual returns.
Stephanie Link, Chief Investment Strategist and Portfolio Manager, Hightower
“Growth is down from 3%, now closer to 1.5%-2%,” Link wrote Monday in a research note. “However, I am not in the recession camp. Consumers are still holding jobs, their wages are growing 4% and inflation is coming down. We’re seeing savings up 5% year over year and gasoline prices are down 10% year over year.
“Interest rates are significantly lower than the 5% we saw only a month ago, and earnings per share are still growing — albeit at lower levels. However, that does not mean it will lead to a higher equity market. It just means that traditional investing, such as fundamentals and valuations, matters.”
Link also said in the note that “this year is going to be more volatile than what we’ve seen in the past several years. Growth can’t keep up with the torrid pace of 3% … We need a period of time to digest the macro and the slower growth. We need to see how the new administration’s policies will work. During these times, turn the TV off.
“I am a buyer after raising cash a few weeks ago. My advice is to own quality, #1 companies that are on sale, for the long term. Buy low and sell high.”
Jeff Bush, Principal, The Washington Update
“There’s a saying, ‘Hope is not a plan.’ But investors are worried there’s no plan,” said Bush, a financial services veteran and political analyst.
“With the on-and-off tariff strategy, the president’s hedge on the possibility of a recession, and worries in the labor market, markets, investors and business leaders are voicing their concern that there is no plan,” he said.
“If consumers exhibit fear by slowing their spending, it sets the stage for a recession. Consumer confidence is harder to change from the Oval Office because the president cannot force people to alter their feelings about prices, job prospects, etc.”
Consumer behavior will determine whether the markets will escape the choppiness soon or there’s more to come, he said.
Ed Yardeni, President, Yardeni Research
“The Stock Market Vigilantes have spoken. They don't like tariffs, and they don't like mass firings of federal workers. That's because they don't like stagflation, and they fear that Trump 2.0's focus on these measures could cause a recession with higher inflation,” he said Monday in a note on Yardeni QuickTakes.
“They really didn't like President Donald Trump's message on Sunday during an interview with Maria Bartiromo on Fox News, as evidenced by today's extreme selloff, which caused the S&P 500 to fall below its 200-day moving average. He indicated that tariffs are here to stay. Only a few weeks ago, it was widely assumed by us and others that Trump would use tariffs as a temporary negotiating tool that would result in freer trade and a more level playing field for American exporters.”
Barry Ritholtz. Courtesy photo.
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