Brian Belsky argues the market has shifted from a momentum-led advance into an earnings-driven one, which still leaves upside but makes a pullback more likely. He wants to use any correction to add to positions, especially in small/mid caps, financials, and other contrarian value areas, while staying broadly invested.
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The speaker’s core thesis is that the post-2009 secular bull market is still intact, but the current phase has changed: the market is now more earnings-driven than momentum-driven. He says that typically means positive returns can continue, but at roughly half the pace of a momentum market and with more volatility. He also thinks the current setup has not yet delivered the sort of correction that usually appears in earnings-led markets, so a pullback is still likely even if the longer-term trend remains constructive. A key practical implication is how he would deploy cash. He says he would remain invested rather than try to time the market, but would put “extra powder” to work after a pullback. He repeatedly frames the opportunity as a broadening of market leadership away from the biggest names and toward more neglected areas, especially value and small/mid caps. …
Near term, the tape looks extended enough that a pullback would be the more actionable setup than chasing the move. If weakness arrives, he wants to add risk into value, small caps, and other laggards rather than the crowded leaders.
Over the next several weeks to months, the base case is a slower but still positive market with broader participation as earnings momentum diffuses beyond the megacaps. That view depends on a correction or cooling in the largest names and better relative performance from smaller, cheaper parts of the market.
Structurally, he thinks the secular bull market remains alive, but leadership should become less concentrated over time. The longer-run regime is one where active stock picking, smaller caps, and quality growth at reasonable prices matter more than owning only the index giants.
The post-2009 secular bull market is still intact, but the current cyclical phase is now earnings-driven rather than momentum-driven.
He contrasts the current market with prior momentum-led behavior and says it has transitioned to earnings.
Earnings-driven markets can still rise, but usually at roughly half the pace of momentum markets and with more volatility.
He explicitly compares return/volatility characteristics of the regime shift.
A pullback has not yet occurred in the earnings-driven market, so a correction is still expected.
He says earnings-driven markets typically see pullbacks and this one has not yet done so.
How should investors deploy cash if they expect a pullback in an earnings-driven market?
The guest says they expect some kind of pullback and do not try to time markets closely, but they would put extra cash to work when that pullback arrives. They remain invested in the meantime.
What are you buying when you broaden allocations into value and small caps?
He says the approach is contrarian and value-oriented, focusing on financials and on turnaround or broken growth companies with good platforms or products. He also argues small and mid caps could be very exciting over the next ten years because broadening out from the mega-caps creates opportunity for stock pickers.
Should investors still favor international and emerging market stocks after their strong run?
He cautions that currency is not the only reason to own those assets and says investors should ask what they are actually buying in fundamental terms. He also notes the U.S. has higher-quality goods and services relative to many alternatives.
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