In a new note to clients published on Friday, BMO chief investment strategist Brian Belski, one of the most optimistic voices on Wall Street and known for accurately calling the market turnaround in 2022, urged investors not to let the current uncertainty and fear dictate their decisions. Despite the growing chorus of negative sentiment and downward revisions to macroeconomic forecasts, Belski remains steadfast in his bullish outlook. He emphasized that changing one’s view based on uncertainty and fear alone is not only unnecessary but also inappropriate. “Uncertainty generates emotion, which comes from fear,” he wrote, adding that emotional decisions often lead to poor outcomes. Belski also highlighted that the broader market trends are being overly influenced by company-specific issues, which are being extrapolated to the entire market, creating unnecessary panic. He reiterated that his team’s confidence in the markets and the economy remains unchanged, even as the S&P 500 (^GSPC) entered correction territory earlier in the week, defined as a 10% drop from recent highs.
Belski made it clear that corrections, while uncomfortable, are a normal part of market cycles and do not necessarily signal the start of a bear market. He reminded investors that corrections are opportunities to reassess and potentially take advantage of lower valuations. The S&P 500’s move into correction territory on Thursday was met with heightened anxiety among investors, but Belski was quick to calm nerves. “We know that corrections do not necessarily equate to bear markets,” he said, emphasizing the importance of staying disciplined and focused on long-term fundamentals. Belski’s optimism is rooted in his belief that the market’s resilience and underlying strength, particularly over the past two years, position it well to weather the current turbulence. Despite the recent instability, he sees no reason to abandon his positive outlook.
Looking back at the market’s performance over the past two years, Belski pointed out that the relentless upward momentum, driven by optimism around artificial intelligence (AI) and a strong economy, has set the stage for the current period of volatility. The market’s uninterrupted rise created a sense of complacency, and the recent correction serves as a reminder that markets do not move in a straight line. Belski’s team has consistently argued that the market’s fundamentals remain strong, with corporate earnings and economic data showing resilience despite external challenges. However, the recent wave of fear and negative sentiment has led many to question whether the market’s upward trajectory can continue. Belski addressed these concerns directly, stating that his team’s view remains unchanged, and they see no reason to revise their forecasts simply because of short-term uncertainty.
Belski also addressed the flood of client inquiries his team has received in recent days. Many clients are not only seeking his opinion but are also asking why he and his team are not changing their stance. Belski acknowledged the uncertainty and acknowledged that the macroeconomic landscape is challenging, but he argued that it is precisely in these moments that discipline and conviction are most important. He noted that while many firms may be revising their forecasts downward, his team’s process and analysis lead them to a different conclusion. “We believe it is inappropriate to be changing forecasts for the sake of uncertainty and fear,” he said, emphasizing that forecasts should be based on facts and data, not emotions. Belski’s message is one of calm and patience, encouraging investors to stay focused on the bigger picture rather than getting caught up in the noise of the moment.
In addition to addressing client concerns, Belski took the opportunity to reiterate his team’s outlook for the markets. He acknowledged that the past two years have been anything but normal, with the market’s upward momentum driven by a combination of AI enthusiasm, a strong economy, and a favorable interest rate environment. However, he noted that this momentum has also created imbalances that are now being corrected. Belski’s team believes that the market’s current instability is a natural reaction to the prolonged period of optimism, and they see this as a necessary adjustment rather than a sign of a deeper underlying problem. While the current environment is undeniably challenging, Belski’s team remains confident that the market’s fundamentals are strong enough to support further gains over the long term.
As the week drew to a close, Belski summed up his team’s view succinctly. The market’s current instability, while unsettling, is not a reason to abandon optimism. Belski’s team believes that the market’s fundamentals remain strong, driven by a resilient economy and corporate sector. He urged investors to stay disciplined, avoid making emotional decisions, and focus on the long-term outlook. While the road ahead may be bumpy, Belski sees no reason to believe that the market’s upward trajectory is coming to an end. Instead, he views the current correction as an opportunity to reassess and prepare for the next phase of the market’s cycle.
