Money Life with Chuck Jaffe

Financial journalist Allan Sloan, a seven-time winner of business journalism's highest honor, the Loeb Award, says in his latest piece for Barron's that no investment strategy works forever, and that time is now up on the Magnificent Seven stocks. Sloan notes that during the first seven months of 2025, NVidia and Microsoft accounted for more than half of the gain of the entire Standard & Poor's return, but that Apple "was totally rotten and knocked 18 percent off the S&P's return." His point is that most of the seven stocks that have been driving the market for the last few years "are now hitting below their weight," and the top stocks are now losing ground as a group to the index/market itself. Todd Rosenbluth, head of research at VettaFi, makes a high-income fund that invests in options on bitcoin -- and that yields a whopping 27 percent -- his ETF of the Week. The fund is relatively new and just topped $500 million in assets, and Rosenbluth says it can be an allocation choice for investors who might otherwise avoid cryptocurrency because they want investments that produce income. In the Market Call, Cole Smead, portfolio manager at Smead Capital Management, talks about the firm's approach to value investing and what is standing out during a period where he says market leadership is going through a rotation.

Lawrence McDonald, creator of The Bear Traps Report, says that as "tertiary assets" like meme stocks and momentum plays have started to break down in the last week, it's a sign that volatility will pick up and that the market is "coming into a 10 to 20 percent pullback in the next month to month and a half." McDonald says that the selloff will be part of a rotation, that the market broadly can recover but with new leadership. He is worried about the potential for the Federal Reserve to start cutting rates before inflation has been killed off, which he says will force investors into "portfolios that are much more focused on hard assets." Dan Sotiroff, senior manager research analyst at Morningstar, discusses this week's news that Vanguard is opening ETF versions of three popular, actively managed stock funds, and talks about the mechanics of the new issues but also what the news means for the broader fund industry. And with Chuck about to become a first-time grandfather, he chats with Matt Gellene, head of consumer investments at Bank of America, about what families can and should do to save and invest for raising children, paying for college and more, and for helping youngsters develop healthy attitudes about money.

Bill Stone, chief investment officer at Glenview Trust, says that there are signs that the economy is slowing, but he believes rate cuts can help the economy keep earnings growth going and can forestall any recession. "Betting against things to get better over the long run is not a very smart bet," Stone says, so he's suggesting investors don't let worries get the best of them now. Stone says that "A bet on Europe is a bet against technology," so while he understands concerns that investors have with valuations — particularly with the prices of tech stocks — he is not tilting in directions that might move him away from what has been working during the current bull run. Avi Gilburt, founder of ElliottWave Trader, does think the bull market will be coming to an end — and a long, slow, difficult end at that — but he says the signs of the bear market he has been anticipating for several years now are not clear yet. "Until the market gives us the sign that a bear market has begun," Gilburt says, "upside is still very much intact,m but you need to be very cautious as you approach the market over the coming years." He discusses the signs he is looking for and just how ugly he thinks the eventual downturn will get. Corrin Maier, vice president at TruStage, discusses "payment-protection products," a form of insurance that consumers can make on big-ticket purchases that can protect them in the event of job loss or other hardship. She helps consumers determine whether these options are worth their fees.

Ryan Detrick, chief market strategist at the Carson Group, says that he expects the stock market to go through "a 4% to 6% normal, mild pullback" in short order, a downturn that he says is likely to be good for the market, helping it get ready to benefit from positive economic news and an eventual cut in interest rates. Detrick says that he expects developed Europe to remain strong, and he believes investors who are heeding market worries should rebalance their portfolios to get back onto their plan, because diversification pays off when a market is touchy about headline events. David Trainer, founder and president at New Constructs, says that while warm Krispy Kreme donuts may make people happy, the company's stock — which he has warned about since it went through its IPO in June 2021 — is stale. He says that this is a meme stock with a negative economic book value and real potential to go to zero. Tom Martin, senior portfolio manager at Globalt Investments, brings his disciplined, earnings-driven approach to stocks to the Market Call.

Eric Stein, chief investment officer, Voya Investment Management, says that if the economy can muddle through until the Federal Reserve cuts rates, it will be positive for the stock market and the broader economy, allowing for 2026 to be another year that continues the winning streak for stocks. Stein says that he believes markets "get desensitized to similar news over time," and that the current markets may still be fixated on tariffs, but "general tariff noise" is now priced in and aren't enough to derail the market or create a recession. He says that economic changes, including the building deregulation story, will help small-cap stocks move from laggards to leaders. Matt Freund, co-chief investment officer at Calamos Investments, expects the Federal Reserve to make "a couple of cuts this year, followed by two or three cuts next year," and that those moves will be made while inflation stays at current levels or rises slightly. Like Stein, Freund thinks changes in economic conditions will help the market broaden out to include small-caps, and while he is worried about the market facing a rough patch in the fall, he said the market should be able to enter 2026 with room to run. Jeff Bishop, chief executive officer at RagingBull.com, says that when he examines the technical patterns he doesn't "see any reason to not want to continue to buy the market here." Bishop expects the market to suffer a 10 percent correction in the fall, but wind up higher. He thinks 2026 is shaping up as a year when the market could post low double-digit gains again. Plus, Chuck answers a listener's question about new rules that allow private equity, private credit, cryptocurrency and other alternative assets in retirement plans, and whether that access is really a good idea.

Jeff Muhlenkamp, portfolio manager for the Muhlenkamp Fund, says in today's Money Life Market Call that one of his big fears right now is in order to deal with government debt, authorities will de-value the dollar, so he has been adding gold and precious metals names to the portfolio to hedge against that potential. He is also looking at deregulation as a possible driver for future as well, and while he is a value-oriented manager, he noted that there are plenty of ideas that look promising despite a market that is at record highs. David Lau, chief executive officer at DPL Financial, discusses how lifetime income and annuitizing retirement savings has become particularly important now, given uncertainty over the future of Social Security. He notes that investors who are considering annuities may want to be making the purchase before interest rates start to fall, but he also notes that annuity products that promise downside protection against stock market risk are likely to fall into the category of "too good to be true." Plus, in the ETF of the Week, Todd Rosenbluth, head of research at VettaFi, goes for an actively managed international small-cap fund with his ETF of the Week.

Mark Luschini, chief investment strategist for Janney Montgomery Scott, says that with no one talking about recession these days, he says "it is the one thing the market is at risk of having happen right now" because the market isn't pricing in any potential downturn. Recession is not his base case, but he says there is an economic soft patch to get through that will take the economy to the edge of stall speed; he does think the market will get through that to finish the year higher, with the Standard & Poor's 500 moving hitting 6,600. Luschini thinks investors will want to ride that upturn well diversified, including allocations to international stocks — and particularly developed Europe — where he thinks valuations will help to keep this year's run-up rolling along. Joseph Schuster, chief executive officer at IPOX Schuster, says that the market for initial public offerings has been hot this year — a fund based on his landmark IPO index is up more than 30 percent year-to-date — and has some more solid names that are ready for their roll-out, including financial companies Bullish and Miami International Holdings, which make their debuts this week. Plus, with the S&P 500 having closed Tuesday above 6,400 for the first time, Chuck has a recommendation for how investors should be reacting to the news, and the move they should be making here with the market at highs.

Michael Kelly, portfolio manager and global head of multi-asset at PineBridge Investments, says that the evolution boom in artificial intelligence is the kind of generational market event that only happens "once every 20 or 30 years." He says it will be "very meaningful and we believe very good not only for the economy but for the markets." He is optimistic that the increased productivity created by the AI revolution can help the economy grow its way out of the fiscal concerns over deficits and other issues that overhang the market. That said, he does see mild turbulence ahead, but without a major correction or downturn as the market winds through the rest of 2025. His advice for that turbulence: "Buckle up." Paulo Costa, senior behavioral economist at Vanguard, discusses the firm's research into the emotional and time value of advice, which showed that the benefits of financial advice extend far beyond simply having expertise at the helm making investment choices. Plus, Chuck answers a listener's question about the use of one or two popular funds to be an entire portfolio — a strategy particularly popular with members of the FIRE movement (Financial Independence, Retire Early) — and he examines the pros and cons of making simplicity the cornerstone of an investment portfolio.

Amanda Agati, chief investment officer at PNC Asset Management Group, says that with the purple haze of fiscal policy uncertainty and tariffs having lifted, the "pace of natural advancement" doesn't have a lot of room left in 2025, but after a slower grind into the end of the year, she thinks that 2026 "is shaping up to be an acceleration type of a year." She expects broader stock market participation to help with that, though she says that breadth will extend to the 493 stocks that are in the Standard & Poor's 500 but not the Magnificent Seven, rather than to small caps. Agati also said that the international rally thus far this year is likely to slow significantly. David Trainer of New Constructs put "unattractive asset managers" in the Danger Zone this week, and singled out Virtus Investment Partners as a prime example, saying it wasn't just that the money manager has a suite of mostly unattractive funds, but that its results as a stock could get ugly too. Ted Rossman, senior industry analyst at BankRate.com discusses the site's back-to-school shopping survey, which surprisingly showed that fewer Americans are saying that school shopping is putting pressure on their finances this year. One reason why is that shoppers say they have changed some of the ways they shop in response to higher inflation. Plus, in the intro segment, Chuck discusses his experience with a warranty program — something he normally disdains and avoids — that started out looking ugly, but wound up with a happy ending.

Craig Callahan, chief executive officer at ICON Advisers, says that his calculations on the stock market show that despite being near record-high levels, the market is "slightly underpriced relative to fair value," meaning it has room to move higher from here. Callahan says that a small-cap rally and market changes that started to surface a year ago were disrupted by the tariff tantrum but should return in the next year. Moreover, he sees continued economic growth, fueled by strong earnings and growth of the money supply rather than reduction in interest rates, which he says should be enough to support gains even while investors worry about downdrafts, corrections and recessions that he does not think are on the immediate horizon. Dave Sekera, chief U.S. market strategist for Morningstar, brings the firm's bottoms-up fundamentals-focused, discounted-cash-flow analysis system to the Market Call. Kenneth Burdon, an attorney with Simpson Thacher and Bartlett, discusses a court case between a closed-end fund activist investor and four fund sponsors that has made it to the U.S. Supreme Court and that could change the face of activism and the ability for investors to force a fund's board to take steps to narrow discounts and improve its investment prospects. Because investors often buy closed-end funds at a discount hoping to profit when that pricing discrepancy corrects, the suit could impact the way investors view discounts and a fund's prospects for future gains.