51% Expect a Market Disaster… So Why Am I Excited?
Robert Ross|April 1, 2025
I don’t make bearish calls lightly.
In fact, I haven’t called for a downturn in stocks or crypto since early 2022.
Yet, we’ve experienced several 10%-plus corrections in the S&P 500 over that stretch.
Each time, I pounded the table, saying, “buy the dip” – especially in the Mag 7 – the highest-conviction part of my personal portfolio.
Yes, the famous last words in investing – this time feels different – have made many look foolish, at least in the short term.
It’s not just about technicals, which we discussed last week, or earnings or sentiment.
It’s policy.
Specifically: Trump’s trade policies.
A recent Allianz survey revealed that 51% of investors now expect a full-on market crash.
Not a correction.
A crash.
When over half the crowd huddles in fear, it usually means the surprises happen to the upside, not the downside.
But what’s driving this shift?
This White House Doesn’t Care About the Market
The White House doesn’t care about the stock market…at least not like it used to.
On February 5, Treasury Secretary Scott Bessent said, “The president and I are focused on the 10-year yield, not the Fed’s benchmark interest rate.”
In March, he shut the door on a “Trump put” under this market, signaling that falling yields – not rising stocks – are now the measure of progress.
Translation?
They want yields down. But not by cutting rates.
How do you do it without the Fed?
You “Volcker” the economy.
I believe Trump and Bessent are engineering a fiscal slowdown by slashing deficits (via DOGE), shrinking government, and rolling out a new round of tariffs.
It’s austerity by design.
This “controlled demolition” aims to detox the economy from years of deficit-fueled growth.
It’s painful.
We can expect lower earnings, slower GDP, and maybe even recession.
It’s an intentional trade-off.
The top 8% of Americans who own 94% of stocks and drive 50% of all consumer spending are the ones hurt the most.
So what’s the endgame?
To induce a reverse wealth effect to cool inflation and bring yields lower.
Markets Were Caught Off Guard
Everyone expected Trump 2.0 to look like Trump 1.0: tax cuts, deregulation, and stock-friendly policies.
Instead, we got the fifth-fastest correction in 75 years.
The “Trump will juice stocks” trade unwound violently and was replaced with a laissez-faire attitude.
But let’s keep things in perspective.
The S&P 500 is up 58% from the October 2022 bottom.
The average bull market historically returns +192%.
If this is the end, it would be one of history’s shortest and weakest bull markets.
That’s why I don’t think the bull market is over.
This feels more like 2018 – a mid-cycle correction – than 2022’s full-blown bear.
That fits with history too. Year three of a bull run is often the choppiest, with weak returns and sideways action.
Panic Is a Setup for Opportunity
Now, back to that Allianz survey.
Over half of investors expecting a crash?
That’s not normal. It’s rare.
And it’s backed up by hard sentiment data.
The AAII Sentiment Survey printed some of the worst readings since the 2022 bottom.
The put/call ratio has spiked, meaning investors are loading up on downside protection.
The CNN Fear & Greed Index? Deep in “Extreme Fear” territory.
When retail braces for collapse and big money holds high cash levels, it tends to mark a bottom – or at least a near-term bounce.
As John Templeton put it: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”
We are nowhere near euphoria.
So What Now?
Look, I’m not saying we’re at the bottom.
We could still go lower.
But the odds of a total collapse starting now – when everyone already expects it – are much lower than people think.
That’s why we’re staying tactical and picking our spots in Breakout Fortunes.
We’re rotating into quality.
We’re watching sentiment.
We’re looking for relative strength.
And we’re keeping powder dry for when the next trend emerges.
Because the next bull leg will come.
It just may not look like the last one.
Robert Ross
Robert Ross’s unique style of clear and direct stock research helped him build a massive following in the investment research industry, starting his career at investment research company Mauldin Economics and quickly rising through the ranks to become one of the youngest chief analysts in the industry. Today, over a million investors turn to Ross every month for his take on investing, economics, and personal finance. He now shares his unique insights in Total Wealth and Manward Money Report.
