Odd Lots Marko Kolanovic Is Back With a Warning for Stocks
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Feb 3, 2025 Marko Kolanovic, former chief global market strategist at JPMorgan, shares his insights on the current stock market climate. Known for his prescient calls, he discusses the rising valuations and the fallout from the recent tech stock decline, including issues of market concentration. He delves into the impact of AI advancements and his research techniques. Kolanovic also emphasizes the complexities of investor sentiment amidst geopolitical risks and the potential repercussions for future market dynamics.
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Unprecedented Market Concentration
- Market concentration is at its highest in 50 years due to thematic tech investing, momentum, and geopolitical factors.
- This concentration, driven by flows into large-cap tech and US equities, has led to stretched valuations.
Factors Influencing Market Momentum
- Fundamental drivers like economic concerns or geopolitical events can stall momentum but may not change it if technicals are strong.
- Trend investors use various price momentum signals, with the 200-day moving average being a key psychological level.
Rotation, Not Contagion
The market reacted to DeepSeek with rotation rather than broad selling, likely because economic data remained strong.
- This rotation benefited laggards like Apple and Meta, while high-multiple and momentum stocks experienced some selling.