Stack's Jonson sees 'substantial downside risk to the index'

Zach Jonson, senior portfolio manager at Stack Financial Management, says current valuations "really only fall in line with 1929 and 1999, so we see substantial downside risk" to the Standard & Poor's 500, but investors can avoid "historic ber market losses" in the mega-cap stocks that have lead the market for the last two years by rotating toward the value and lagging plays. He recommends equal-weight index plays rather than traditional cap-weighted plays, and being patient with the stocks that were unloved, which will have to overcome the shifting momentum of mega caps as the market cycle changes. His sentiments about a broadening market were seconded by Patrick O’Hare, chief market analyst at Briefing.com, who says that what's coming will be more of a stock-picker's market where investors are paid for being thoughtful and discerning amid a market that's likely to be stuck in a tight range as leadership changes and amid geopolitical uncertainty. Also on the show, Chuck Bell of Consumer Reports discusses how the potential end of the Consumer Financial Protection Bureau will impact consumers, and Chip Lupo discusses a WalletHub study showing that Americans collectively will spend a record $14.2 billion on Valentine’s Day gifts, with the average lovebird shelling out $186 this year.