Valuation concerns persist as US stocks (^DJI,^GSPC, ^IXIC) trade near record highs. The Bahnsen Group CIO David Bahnsen joins Julie Hyman and Josh Schafer on Market Domination Overtime to discuss his market outlook for 2025.
"I think you're going to see more broadening out, but it really is impossible to separate the story about the valuation issues with Big Tech and [the Magnificent] Seven from the overall market because of the very concentration issue that many of us are talking about," Bahnsen says.
"There will be change [in the market], and I don't think timing is possible. I think being sensibly balanced going into the change, which is inevitable, is the right thing to do," he says, adding the risk won't cause "immediate violence [in equities], like the 70% drop in the Nasdaq of March 2000 that lasted for 15 years
"[But] I think it's going to be a repricing to some normalcy that a lot of these investors don't know can happen."
The strategist says that experienced investors who have been around for only few years have "never experienced a real drawdown."
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He notes that given the current market concentration, "all it takes" for a sell-off is one quarter of Microsoft (MSFT), Amazon (AMZN), or Alphabet (GOOG, GOOGL) "announcing that they're ordering less from Nvidia (NVDA) and the kind of virtuous cycle that has driven that space becomes a negative feedback loop."
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
This post was written by Naomi Buchanan.