Buying Opportunity Of The Year? Why S&P Could Finish 2026 Up 10%

0:00What's going on guys? Today we've got a very special treat. We've got Ryan Detrick, the Chief Market Strategist at Carson Group. And in this conversation, we do a whirlwind of what's happening in financial markets. Stocks, are they going down? Are they going up? What's he telling clients? What about oil, gold, bonds, everything else in the portfolio? Ryan comes with data, unique insights, a couple of little laughs for each of you. So here's my latest conversation with Ryan Detrick. We're live from the desk of Anthony Pompliano.

0:35all right ryan i thought a great place to start the conversation is the stock market is down almost 10 to uh to start the year people obviously freaking out um you seem to think hey maybe this is normal maybe we just get these drawdowns you know every year and uh stocks are going to recover is that the general sense yeah first of all thanks for having me back and um i've had a little bit of a cold so we'll see if we can get through this you know on top of the market doing what it's doing But the reality is, yes, the S &P 500 was down about 9 % from the late January peak until just recently. But then you look, Anthony, and the average year pulls back 14%.

1:06You know, last year, right now, we actually went into a market correction last March. I remember why. Like, Liberation Day was in April, right? I mean, it's because we were worried about deep seek and volatility. So by no means are we minimizing what's going on out there. But after the run that we've had, you know, I think it's, oh, by the way, it's a midterm year. Historically, those are usually the most volatile, as lots of people have been saying, including myself. You know, I'm a little surprised with the weakness that we've had. But then again, you look at the headlines and it's like if you looked at the headlines, you'd almost be more surprised.

1:36We're not down more. Maybe crude oil should have been up more than it was. It's a very unique situation. But I think you need to remember, volatility is the toll we pay to invest. And most years, on average, do see at least a 10 percent peak to trough correction. We're not quite there yet. Who knows? Maybe by the time people listen to this, we will be. But I'm not so sure this is so abnormal as of yet. Now, a big reason why this drawdown happened is because we went up for like nine months straight. And so people kind of forget that you're just giving back some gains that you already got. Right.

2:05It's not like this is net new capital. It's being destroyed. Is that the way you look at it? Exactly. You know, the Dow is up like 10 months in a row. Actually, now it's going to be down in March. And the S &P 500 is up nine months in a row on a total return basis. It's not surprising. Those are two of the longest streaks we've ever seen. And you talk about markets and the volatility and all that stuff. One thing that gets me, though, if you look at what since the war started, yes, listen, stocks are lower on the whole. We get that. Earnings on the S &P 500, Anthony, the last month, the forward estimates 12 months out, are up 2.7%.

2:38Okay, I mean, that's a big jump in what expected earnings are supposed to be. Profit margins just hit 15%, the highest number ever as well. And most of the jumps we've seen have come from technology. But all 11 sectors forward 12 months guidance the last four weeks since all this stuff started have actually increased. So there's lots of ways to slice and dice. And I get a lot of people as well. The market's still down. I get it. Yes, the market is still down. But three months ago, we could have said, you know, if you're worried about anything this year, maybe some valuations are a tad stretched.

3:07That is not the case anymore. Stocks have pulled back and earnings have remained strong, which hopefully should help calm longer term investors. I recently did this big study, if you will, a research. And I wrote this piece about software stocks in particular. And basically, I want to challenge myself to go write the bull case for the software stock. So I know everyone is bearish and worried about AI and the seat compression and all this stuff. But one of the things I found interesting is Wall Street analyst consensus on the Microsoft, the sales forces, the Adobe's. These things are like 50 to 150 percent appreciation from where we currently are.

3:42So the analyst, now, whether you agree with them or you don't hold a different subject, But if you do think that they've got, you know, some good work that they're putting together, they are all believing that these stocks have a lot of room to run, which seems different, you know, counter to kind of the retail sentiment we're seeing in the market. Now, you're right. And there's no question when you get into with A.I. and destruction, we've seen specifically in the software names and the SAS names. I mean, some of those companies are in trouble. I think we've thrown the baby out with the bathwater, though.

4:07I mean, again, a year ago right now, we're talking about deep seek. No one's going to invest in A.I. anymore. It's almost laughable, you know, what we've over the past year with the continued AI rollouts that we've seen. You know, we we manage a lot of money at the Carson team, and we actually added a little bit of software ETF. Oh, at this point, maybe four or five weeks ago, again, on the realization that software stocks are as cheap as they've been since 2014. I've done this a long time. You've done this a long time. Sometimes things are cheap for a reason. I'm aware of that. But again, for longer term investors that are willing to look out a year to two.

4:39I mean, listen, these are some names that maybe you loved this time six months ago when tech peaked right around Halloween last year on a relative basis. Obviously, it's lagged since then. There are some really nice valuations, and there's still some strong moats and still some strong reasons. I think we just looked Microsoft's down 35 % from its peak. I mean, listen, it's happened before. It might happen again. But that's a company that still makes a lot of money. And we think a year from now, people are going to look back and realize this was probably more of an opportunity not to panic but maybe to dip your toe in and buy some solid companies on the cheap.

5:09Now, we've seen oil's price go up. We've seen energy prices go up. Gas just crossed over$4 on average in the United States. I think there's a lot of people who are worried about the short-term inflationary fears coming from those higher gas prices. How are you guys talking to clients about that? No, you're right there. I know one thing about Carson that started this year, we're with a real smart guy named Sonovar Gies on our team, our chief macro strategist. He looked at something like Core PCE, the Fed's favorite measure of inflation, 178 components to that. And what we noticed, we're actually seeing inflation broadening out a little bit, right?

5:42Now, it doesn't mean inflation is going to soar to 9%. We don't think that. But we said maybe we have a tad more inflation problem than what the market is kind of pricing in. And then you look at what just happened with oil. Listen, that has obviously kind of been the cherry on top. But I know you and I have talked about this. What we've done, yes, we're overweight equities. We probably have about 68 % to 69 % equities. Now, in that bucket, it's not like we're all in tech names. We've got a wide moat there or a wide dispersion. But in the other stuff, right, we say diversify your diversifiers.

6:10We're not just in bonds. We thought yields would probably go a little bit higher this year. They've gone higher than we expected, but we've shortened our duration. We've owned gold. We've owned commodities. We've owned hard assets. We've had some managed futures, which have done really well this year. So, again, in this more, we would call it not necessarily a high inflation world, but a volatile inflation world regime that we're in. It can go up a little a lot and then come back down a lot. You probably want to own some things if you drop it, hit your foot and it hurts in that type of environment.

6:37And that's obviously, listen, we're over at equities. This has not been a fun go of things. But at the same time, our other bucket have done really, really well being diversified like that. Now, one of the things I think people going into this, if you said, hey, we're going to go and we're going to bomb Iran, there's going to be this global war. There's going to be a bunch of issues. Straits going to get closed. Oil is going to spike over 100 bucks. people would have said, great, I'm going to go and buy some gold. I'm going to go and I'm going to get some bonds and I'm going to go kind of play the geopolitical conflict, you know, in insulation portfolio.

7:08Those things basically did the exact opposite of what we expected. So what does that tell us? Yeah, if it's obvious, it's obviously wrong is an old saying that I think is is we've seen. Now, listen, what do we know? I mean, listen, this time five weeks ago, six weeks ago, the Fed was going to cut a couple of times. That was widely expected. Now, if you look at like Fed fund futures and options, things, the chance of a potential hike are actually higher now than a cut. So that's kind of put it's kind of pressured high yields and a real, real yield. Sorry. And that's actually put the put the kibosh on what we've seen with with gold going so high.

7:41But the reality, again, gold still up on the year. I mean, gold is up 60 something percent, 67 or 68 percent last year, about 30 percent the year before, up 20 percent or so until early January. it. So listen, it was due for some type of a pullback like that. But I think again, the reality is these, most of these commodities in our opinion are still in an overall structural bull market. There's reasons to think that. I mean, I mean, one thing we talked to before in our shop a lot, I was out there saying, I bet crude oil has a pretty good year this year, not because of some fundamental reason, all this stuff.

8:09I think it's a global bull market that we're seeing in commodities or I should say a commodity bull market. I don't like to use the word super cycle, but all these other commodities way up here, gold is way down here. Every time we looked, I'm sorry, crude oil. Crude oil is way down here, around 65, 70 bucks a barrel. So this is probably going to play catch up. And boy, oh boy, has it ever. But you look at what crude oil and a lot of those stocks have done. I mean, clearly they've been amazing. It's been amazing. I mean, XLE is up like what, 40 % or so for the year. Now, the other side of this is one tweet, one resolution, what's going to happen, right?

8:40They're potentially going to come back. I'm not saying just as fast, but they're going to come back quickly. Why I still think in this world we're in now to have more of that diversified portfolio, not just go all in one particular area, one particular sector or anything. To have some, you know, you're kind of diversified. That bucket is really the way you want to be when you have a lot of doubt out there like we do. Now, what are you worried about right now? Obviously, you're very optimistic. I think so am I. People are saying, hey, wait a second. If I like these stocks, they're lower in price.

9:07And so I should be more excited about buying them. But it tells me if there's a lot of volatility, there's probably things that you're watching or concerned about. Yeah. What do they say? the stock market's the only place things go on sale, but everyone runs out of the store screaming. I mean, you know, like people love these stocks three or four months ago, and now they're down 30 to 50%, give or take, and now nobody wants to touch them. You know, our worries aren't all that different probably than a lot of other people. I mean, if the issues in the Middle East continue and crude oil spikes to$150 or$200, not our base case, I'll be very, very clear, that is going to be an issue.

9:39But as someone who manages money and works with financial advisors, works with clients every day. I get to travel the country and talk to clients. And people are very, very worried out there. They see the headlines. They see all the negativity. They see the terrible stuff that's happening out there. And it's not the same. I don't want to say it's the same, but it reminds me a lot of Liberation Day. You and I did this a year ago. And we said, listen, there's probably more of an opportunity after that near 10 to a half percent drop in two days, a near bear market that we had. Everyone gets all bared up and they can't sell fast enough.

10:07And then you look up and the market rips higher, right? History doesn't repeat itself. It often rhymes, Mark Twain, all this negativity. I saw a cool stat this morning that had to look at Goldman Sachs data, a prime book. Hedge funds have sold more the last six weeks in line with a hundred year pandemic. And right after the liberation day, we're down like 9 % on the S and P 500. So there's a lot of hedging out there. One of the fascinating things to me, this is kind of like what the frog and the water and the water boils, this market's not going down a lot. I know it's down. I get it, but all the headlines is that we're down 9%.

10:37I mean, Anthony, you know, it took us over almost two months to go from the all-time high to down 5 % on the S &P 500. I just did some data on that. You look at the last 11 bear markets going back to 1950. You usually are down 5 % really fast, like in a couple of weeks. This one took seven weeks to do that. The reality is if we go into a bear market, that's not consistent because usually the weakness starts early. This has been kind of slow and steady. And I get what's going on out there, but when you stack all of it together. It feels awfully one sided. It reminds me a lot of last year. And you just need some good news that balls into the water a long way.

11:14Get some good news. We're still I mean, we still have a target of the S.P. 500 to load double digit returns this year. And I know it's a long way away, but we also were a long way last year and we did come back and we think that'll happen again. What about the Federal Reserve? Obviously, people, including myself, were advocating for them to cut interest rates. Now we get some short term inflationary pressures. Maybe, you know, hey, wait a second here, that could be, you know, fuel to the fire. But at the same time, we are having this structural kind of deflationary forces that seem to be hitting the US economy.

11:41It's a head scratcher. It's a little bit difficult. What do you think? It is. I mean, the Fed's in a hard spot. I mean, listen, and then you hear Powell said, you know, he did what the Wolf of Wall Street. I'm not going anywhere. He gave that speech where he's not going anywhere now. So who knows when we're going to have new leadership at the Fed. And again, those widely assuming you see some cuts. I think the Fed just on pause. I think the Fed is just on pause. They've said it before with all the stuff swirling and everything going on. I don't think the Fed is nearly as hawkish as what the markets do what they do.

12:06They sway one way and they sway the other. I'm not so sure we're going to get a hike this year. In fact, we don't think we're going to get a hike this year. I think the Fed is probably just on pause for a while and then things calm down and maybe we can get back to some cuts. I mean, the reality is, you know, inflation is running right around 3%. If you look at the data, I know truflation is one thing and all the different things. Shelter is disinflationary. We get all that. I mean, the labor market, I think, is probably a little more important. I know that the Fed is a dual mandate. I get that.

12:30But the labor market, it's shown some cracks. You know, and I think the labor market weakens even a little bit more. That opens the door clearly for the Fed to become a little bit more dovish. But I just think the Fed's on pause until we get a little more clarity out there. Now, the U.S. government, obviously, if we're dropping bombs, we're going to be spending money. And then we've got a midterm. And, you know, if he's the president, then he's probably going to try to make sure you get some money in your pocket so you feel good going into the voting booth. What does that do to the economy? Yeah, the reality you look at.

13:00I mean, I see the same stuff everybody else. People don't feel very good. We just had another low consumer confidence level. Now, listen, consumer confidence has been very low for years, yet the market keeps going higher. So we get that. But it is a midterm year. It's just hard for me to think that this conflict in the Middle East will continue well into the summer months. I mean, again, your average midterm year sees a peak to trough correction about 17.5%. So, okay, what's that mean? Well, one year off the low, and I get it, Anthony. No one knows what a low is. This is the way this works. But then if you take the low of a midterm year and go out one year, the S &P 500 has never been lower going back to World War II, up over 32 % on average off those midterm lows.

13:39Historically, midterms bottom around August. I think we're on a bottom a little earlier this year, to be honest. But those are some things to think about from an investment's point of view. But you're exactly right. There's so much politics and so much policy. And listen, I hate to get political. What happens in midterm years, I'll just state the facts, everybody. The party that wins the election tends to lose 29 seats, right? That's how this tends to work. So Republicans probably lose the House. I know the Senate's a coin flip, maybe get some resolution in the Middle East sooner or later. That means the Republicans can probably keep the Senate.

14:09That's called a divided Congress. All I want the listeners to know is this. last 13 years we've had a divide of Congress stock market went up. I think gridlock is good. I think you don't want too much red wave here, blue wave where you want some checks and balances and you want your government to work together. And I get it. That is a real problem that we have going on right now. But just as we get closer to this midterm year, if we get a split Congress, that's usually a pretty good thing. And maybe the stock market will sniff that out. What what are clients saying? Are they calling freaking out saying, Orion, save me or are they pretty chill and they're saying, look, I've been here before.

14:42I know that we're going to have volatility. You tell me at all the time and, you know, we're all good. Don't worry about it. Yeah, it's more of the latter. Honestly, it's more of the latter. I mean, listen, when people are worried about what's going on in politics, play a huge part of this. Maybe they don't like who's in the White House or they love who's in the White House. And you have the extremes either way. But when it comes to investing, I think at least Carson Group, we've done a pretty good job explaining that, you know, again, volatility is a toll we pay to invest. Your average year sees a 14 percent pizza trough correction.

15:09You see even more in midterm years. And then it happens, right? The Mike Tyson quote, everybody's got a plan to get a punch in the face. And then, oh yeah, we'll see a 10 % correction this year. And then it happens. And it feels very uncomfortable because you look at all the tech names that are down like they are, financials that are down like they are. And if you're heavy in those areas, you're going to feel a certain way that maybe someone with a diversified portfolio is not. But the reality, I think, is a lot of investors have done this for a while. We've been through before. We're not crazy about the headlines.

15:35We're not crazy about what's happening. But you look at the major geopolitical events we've had in our country, honestly, in our globe, in our globe, and how the S &P 500 does one month later, we look like over 40 of them, Anthony. You're down on average a month later. You're about flat three months later. Okay, well, that's kind of where we are right now, at least one month later, clearly lower. But then you get through this, and the market is a funny way of being a forward looking mechanism. It prices things in. It's not about good or bad. It's about better or worse when it comes to investing.

16:00So we've really been stressing to our clients a lot lately. And again, we are a little maybe glass half full by nature, but we're going to get some better news in the markets priced in just terrible stuff out there. And we saw that last year. And we think, again, maybe the upward bias can continue. Now, when we think about what's happening in the economy, everyone immediately goes to oil prices, conflict, etc. One of the aspects that I think is still seems to be checking along is artificial intelligence. And you know, it's deflationary for sure. But I do think that people are starting to use AI in their investment process.

16:32So what are you guys doing internally? Are you guys starting to use these tools to better understand the market or come to conclusions into how to allocate capital? Yeah, we are. We're like a lot of places. I think if you're not looking into it, not leveraging it in a big way, you're going to get left behind. I don't care what industry you're in. Yeah, I'm in financial services. But we have more than 500 financial advisors all around the United States. I think we're in 43, maybe 44 states now. I'm close to signing some more deals. That's why I'm not 100 % sure there. But we've been leveraging AI a lot to give our financial advisors more power and more ability to do things.

17:03We did some data that our financial advisors can work with like 16 % more clients and they don't have to do anything extra because they're leveraging AI. We've got different chatbots and things that we're using. So I think, you know, that's the world we're in, you know, and then the other side of everybody's freaking out because, okay, well, if you have a chatbot that can literally do your taxes for you, do you need taxes? Do you need this? You know, I think it's going to come down to people still want to work with people, people still want to trust people, but you can leverage this on top of what Jensen said many years ago or a couple of years ago.

17:30You're not going to lose your job to someone. You're not going to lose your job to AI. You're going to lose your job to someone who's leveraging AI. So we have really spent a lot of money in terms of our overall budget, in terms of technology and leveraging our financial advisors with a lot of AI, just easy things, simple things like, okay, what's so-and-so's birthday and when their daughter, this and that, and you put all these things in and it gives you this information. So you remember last time you met with them, there's all the notes. AI is doing all the notes. AI is doing a lot of different things to make life easier for financial advisors to help, at the end of the day, help their clients, work with their clients, and kind of be there like we are now when we really need to be there.

18:08Makes sense to me. Ryan, thank you for your time. Where can we send people to find you on the internet? Well, you know, I'm a few places. Let's see. The easiest is probably on Twitter or X, whatever we're going to call it, at Ryan Dietrich. And then our podcast is called Facts Versus Feelings. Sona and I literally just recorded it before you and I did this, a weekly podcast called Facts Versus Feelings. Those are the two easiest places probably. Amazing. All right. Thanks for taking the time to do it. We'll do it again soon. I appreciate it. Thank you, Anthony. All right. Another great conversation with Ryan.

18:37I hope you guys found that valuable. Please remember to subscribe on YouTube and I'll see all of you live tomorrow from the desk of Anthony Pompliano.