So here’s the deal: Bob Doll, who used to run stock strategy at BlackRock (yeah, that BlackRock with $10 trillion under management), just shared his current market playbook. And honestly? It’s refreshingly honest about how weird things are right now.
Doll calls this a “high-risk bull market,” which is basically finance-speak for “stocks keep going up but we’re all kinda nervous about it.” Think of it like being at a party that’s getting a little too wild – you’re still having fun, but you’re also eyeing the exits.
Here’s what’s got him spooked: stocks are expensive (shocking, I know), everyone’s gambling on meme trades again, and inflation might decide to crash the party. Plus, if companies start missing earnings targets – like Microsoft just did, dropping 12% in one day – things could get ugly fast.
“Should either of these conditions fail, the downside could be noticeable,” Doll says, which is Wall Street for “we could all be crying into our portfolios soon.”
His Secret Sauce: Hunt for Cash Cows
Instead of chasing the latest AI hype or whatever Elon tweeted about, Doll’s looking for companies that actually make money. Revolutionary concept, right? Specifically, he wants high return on equity (ROE) – basically companies that are really good at turning investor money into profits.
“If I can have above average return on equity and below average price of free cash flow, I think I have a recipe to do OK in a crazy environment,” he explains. Translation: buy profitable companies that aren’t ridiculously overpriced.
The Shopping List
So where’s he putting his money? Banks. Yes, boring old banks. Specifically:
- Bank of America (BAC)
- JPMorgan (JPM)
- Wells Fargo (WFC)
- Citi (C)
His logic? These big banks have solid balance sheets and are actually cheaper than other financial stocks. Plus, they’re basically money-printing machines when interest rates are decent.
Outside of banking, he’s betting on Gilead Sciences (GILD), a biotech company that’s generating $1 billion in free cash flow. Not too shabby for a company that’s up 46% over the past year.
The Bottom Line
Look, nobody knows where this market is headed – not even ex-BlackRock strategists. But Doll’s approach makes sense: in a world where everything feels a bit unhinged, maybe stick with companies that actually make money and don’t cost a fortune.
It’s not the sexiest strategy – you won’t be bragging about your bank stock gains at dinner parties. But when the music stops and everyone’s scrambling for chairs, you might be glad you picked the boring, profitable companies that actually know how to run a business.
Just remember: this isn’t investment advice, it’s just one smart guy’s take on navigating a market that’s equal parts exciting and terrifying. Do your own homework, and maybe don’t bet the farm on anything – even the smart money gets it wrong sometimes.