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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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.
Evolution of Research
- Marko Kolanovic’s research process evolved from quantitative modeling in physics to analyzing market data, flows, and options.
- He emphasizes understanding market technicalities like flows, options convexities, and liquidity.
Market Sentiment and Mean Reversion
- While market sentiment is a mean-reverting factor, timing its turning point is difficult due to various unpredictable factors.
- These factors, such as AI hype and political changes, make it hard to assess when the market will stall.