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Best Advisor Interviews: Investing Wisdom for the Bear Market

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Smart advice about the market has been in high demand this year, and we’ve done our best to seek it from top financial advisors and wealth management executives. For our Thanksgiving-week Barron’s Advisor Q&A, we’ve compiled some of the best investing wisdom from recent Q&As and podcasts.

The pros suggested investors stay allocated to equities but generally thought there could be more pain ahead before the bear market ends. Their collective wisdom suggests that investors who maintain a long-term view will come out ahead.

From left: Jim Stack, Nelrae Pasha Ali, Fran Kinniry, Solita Marcelli, Joe Duran

Illustrations by Kate Copeland

Jim Stack, Stack Financial Management, interviewed for the Nov. 1 The Way Forward podcast.

What is the biggest risk you see ahead for markets? The risk today is that I don’t think this is over. You want to keep your seat belts fastened. The pressures on the Fed are very real. They’re very high. You have two big risks out there. There’s a universal confidence that we can’t have a recession because earning forecasts are stable. The second one is the expectation that if things start going off the tracks at all, we’re going to see an imminent Fed pivot. After all, that’s what Jerome Powell has done every time since 2018. I think both of those expectations are inherently wrong today.

In terms of bear market statistics, we could still easily be in the first half of this bear market. When you start with a market at the valuation extremes that we were at at the start of this year, I think you have to allow, particularly when the Fed is backed into a corner, you have to allow for the prospect that the bear market’s not going to be average.

There’s going to be a bigger one. And when you step back to those bigger bear markets like the washout of the tech bubble or the financial crisis, it’s not unusual to see the S&P 500 drop between 49%, 50%, like it did in the tech bubble washout, or even over 55% as it did in the financial crisis. Now, am I forecasting that? No, but what we have done is we have cut our allocation back to where we are under a net 40% invested in equities. That’s the lowest level since the washout of the tech bubble. That’s my level of—I wouldn’t call it comfort. That’s my level of discomfort with this market today.

Solita Marcelli, chief investment advisor for the Americas with UBS Global Wealth Management, interviewed for our Oct. 7 Q&A. 

What’s your market outlook for the rest of the year? What I can say most confidently is that we should expect more of the same high volatility that we’ve seen for months now. The overarching market dynamic hasn’t changed: As long as inflation is too high and the labor market is too tight, the Fed is going to continue to raise rates and try to slow growth and bring down inflation. This makes for a very difficult environment for risk assets, and it’s unlikely we will see a sustained rally in stocks until inflation comes down in a conclusive way and the Fed starts to pivot. 

I think the Fed will likely want to see at least three consecutive months of slowing inflation and a cooling labor market before it even considers a pause. That’s unlikely, I think, in the next few months. All of that being said, we’re already about 15% off mid-August highs, and investor sentiment is very pessimistic. So I won’t rule out that a short-term bump is possible. But I don’t think investors should confuse this with being out of the woods just yet.

Fran Kinniry, head of the Vanguard Investment Advisory Research Center, interviewed for our Nov. 11 Q&A. 

How should advisors allocate assets for someone who’s 15 or 20 years away from retirement? The most important things in portfolio construction are the client’s goals, objectives, risk preferences, and time horizon. The investor you mentioned has a contribution horizon of 20 years. That means they’re adding to their portfolio until they retire. But they may have, let’s say, a 40-year total horizon with life expectancy. So we’d have that kind of investor very aggressively postured; they would probably be somewhere between 60% and 80% high-risk assets, which would be equities.

Our research shows that the longer you hold risk assets, the higher the probability of having a real inflation-adjusted return. You start to see the probabilities in the 90th percentile over 10 years, and they get all the way to about 100% over 20 years. The market is a noise machine; it distracts clients from their long-term goals and objectives. The best advisors we see try to tune out the noise and get back to what they are trying to accomplish for clients.

Nelrae Pasha Ali, senior financial advisor, Wells Fargo, interviewed for our July 15 Q&A. 

How are you framing this ugly market for clients? A lot of them have been with me for a long time, and they’ve been through this before. They’re just wanting to know, “Hey, are we OK? Do I need to reduce my income or make any other changes?” For the most part, everyone is on track. But I’m also preparing them for the likelihood that we’re going to be here for a little bit. This is not going to be a quick one like it was two years ago. The next six months may not look good. 

I also think it’s important to address what the clients’ holdings are. I try to peel back some of the mystery. For example, I’ll say, “Hey, where did you spend your money today? Where did you go?” Nine times out of 10, some of the companies they talk about are in their portfolio. I’ll then talk about what those companies are doing, the dividends they’re paying, and so on.

I do like dividend-paying stocks. I love that they pay you to wait. Dividends can help you get through the storm. And if you’re not needing those dividends, reinvesting them becomes quite powerful during a correction, because you’re buying quality companies at a lower valuation. 

Joe Duran, head of Goldman Sachs Personal Financial Management, for a Nov. 15 podcast. 

With so much uncertainty in markets, how can advisors plan for the unexpected? The reality is that we have no control over what interest rates do. And no matter how smart we are, we really don’t know what the markets are going to do on any given day or any given year. We can use some assessments to have impressions about what could happen, but the reality is we don’t know, and we certainly don’t know how people’s individual lives will transpire. 

The reality is a financial plan plays two very important roles. The first, it gives you a good understanding of the things you actually can control. And that’s a very finite set of choices: you can control how much you save, how much you spend, the timing of major events, like when you buy a house or not, whether you retire or not, things like that. Also, you can’t control the returns, but you can choose how much risk you’re going to take. And then lastly, it tells you how much of a safety net you have or a legacy you want to leave behind. 

When you go through a period like we just experienced in the markets, the inclination might be to go completely to cash and move the risk lever to zero. But that locks in a set of outcomes that might be the suboptimal outcome. If somebody’s already retired, if they reduce their spending by four years, by 10%, that has the same impact as recovering from a 20% decline. And if you are not yet retired, literally working an extra 18 months can offset that 20% decline. Financial planning gives you some level of control over the things you can control, but it also gives you some understanding of how you move these levers to get to the optimal outcome for you. 

Questions and answers have been edited for length and clarity. 

Write to Amey Stone at


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