So here’s the deal: Bob Doll, who used to be the big shot stock strategist at BlackRock, just dropped some truth bombs about where we’re at right now. And spoiler alert – it’s not all sunshine and rainbows.
Doll calls this a “high-risk bull market,” which is basically finance speak for “yeah, stocks are going up, but we’re also walking on a tightrope over a pit of financial doom.” Fun times!
Here’s what’s got him sweating: Everyone’s acting like drunk gamblers at a casino right now. Valuations are sky-high, people are throwing money at anything that moves, and we’re one bad earnings report away from watching everything tumble faster than Microsoft did on Thursday (ouch, that 12% drop had to hurt).
The two things that could really mess with our collective financial zen? First, if companies start disappointing on earnings – which, let’s be honest, is getting harder when everyone expects you to cure cancer AND solve world hunger every quarter. Second, if inflation decides to stick around like that friend who crashes on your couch and never leaves.
“What I am concerned about with the inflation rate is if it rounds to 3% instead of 2% this year,” Doll says. Translation: If prices keep going up faster than the Fed wants, they might have to get all hawkish again, and nobody wants that party to end.
The Secret Sauce for Survival
But here’s where it gets interesting. Doll’s not just doom and gloom – he’s got a game plan. His magic formula? Hunt for companies with high return on equity (ROE) but low price-to-free-cash-flow ratios. Basically, find the efficient money-making machines that aren’t ridiculously overpriced.
“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 says. It’s like finding a Ferrari that’s priced like a Honda Civic – rare, but worth the hunt.
His Actual Picks (The Good Stuff)
So where’s he putting his money where his mouth is? Big banks, baby. Bank of America, JPMorgan, Wells Fargo, and Citi are his fab four. Why? They’ve got solid balance sheets, they’re cheaper than other financial stocks, and they’re basically the poster children for his ROE strategy.
Sure, all four are in the red for 2026 so far, but Citi’s been the star performer over the past year with a 42% return. Not too shabby for a “boring” bank stock.
His wild card pick? Gilead Sciences, the biopharma company that’s apparently printing money with $1 billion in free cash flow. It’s up 14% this year and 46% over the past 12 months, so maybe this guy knows what he’s talking about.
The bottom line? We’re in a market where you need to be smart, not just lucky. Doll’s recipe might not be the most exciting thing since sliced bread, but in a world where everyone’s chasing the next shiny object, sometimes boring wins.