Barry Bannister of Stifel predicts a 500-point drop in the S&P 500, likely in the third quarter. Known for his accurate market calls, Bannister believes the market is currently overvalued, with high multiples and a significant rise over the past year and a half without a major correction. His prediction is based on both earnings and the disproportionate gains driven by a few technology stocks. Bannister anticipates a correction that could deflate these inflated valuations and provide a healthier path for future growth.

Transcript:

We have an expert calling for a 500-point drop soon.

Tell me how that works.

One of the institutional equity that we’ve always followed, and I’ve written about numerous times, is Barry Bannister, who’s the chief guy at Stifel.

And right when there was a huge panic, remember when the whole COVID started to unwind early in 2020, the markets exploded down, exploded down, you know, 10, 12, 15, 20, 34% in some areas.

And Bannister came out and basically when everybody else was saying, boy, keep selling, keep selling. He was like, no, this is the place where you buy.

And then he reiterated that. And this was in like March and late March and then April.

And then he reiterated that later that summer.

And over the years, he’s made really, really solid calls.

And he is by no means one of your perma bear guys who’s constantly saying the market’s going to crash, the market’s going to crash.

But he thinks that it’s wildly overvalued and that we could have a 500. He thinks the next move, big move down on the S&P 500 will be 500 points.

And he thinks, you know, third quarter could be the time when that comes.

Now, is his opinion on this mostly earnings-based?

Well, it’s earnings and just the sheer rise in multiples that are way out of normal ranges. I think it’s a lot of what Barry sees.

Given the big run we’ve had over the last year and a half, without really any major correction, I think he’s just kind of playing the game that, hey, we’re due for one, and that will kind of take some of the air out of the tires and give us a path to go higher.

And, you know, I mean, any investor that’s been in this game long enough knows that, you know, on a long-term trend, here’s your S&P 500.

But it’s going to have big dips and it’s going to have some big spikes higher.

And I think he sees earnings plateauing some.

And he also sees the fact that most big names in the business and technology, because most of these gains have all been driven by seven, 10 technology stocks that are in the S&P 500 and the Nasdaq.

So everything else is trailing. And when those stocks roll over, the ones that have driven everything, that’ll drive the market down as well.

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