Market At Risk Of Correcting In A 'Risk-Off' Reset? | Lance Roberts

**Lance Roberts** (0:00)
So kind of where the market goes next is going to be important. Do we break out to the upside and head up toward 7100? Or are we going to have a bigger correction between now and summer? Entirely possible, you'll get a 5 or 10 percent correction here that works off some, and again, we might see that across maybe all asset classes at once. Maybe we see the market just kind of reset itself, metals go down, stocks go down, whatever else, emerging markets and small caps and mid caps, they all kind of get hit at the same time and you just kind of get this risk off move in the markets that resets the markets 5 or 10 percent lower and gives you a much better entry point to put money to work.

**Adam Taggart** (0:46)
Welcome to Thoughtful Money, I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you here at the end of another week. For another Weekly Market Recap featuring my good friend, the gravitational portfolio manager, Lance Roberts. Lance, how are you doing?

**Lance Roberts** (0:59)
Are you saying I'm getting fat? Like I'm getting my own orbit now?

**Adam Taggart** (1:01)
I mean... I was thinking more ego. Just your ego is so big, it has its own gravitational field.

**Lance Roberts** (1:08)
It definitely has its own gravitational pull, for sure.

**Adam Taggart** (1:11)
Yeah. No, I was actually thinking there's a number of assets for which gravity seems to suddenly be taking over. Precious Metals will obviously be one of the ones we talk about today. But there are a few others that you were even just mentioned to me right before we turned the camera on. And actually, why don't we start with that, Lance? So you and I have talked about how pretty much since late fall, right? Like October, the hyperscalers haven't really gone anywhere, right? And therefore, the S&P hasn't gone, has been very range-bound. Did manage to hit an all-time high, but that's kind of been within a relatively narrow range. We just saw something this week we don't see very often, where we saw Microsoft down like 11%.
And so, I'm curious for you, how much is that grabbing your attention, not just because a big company is down 11%, but sort of as a bellwether for perhaps some other challenges to the AI trade going forward?

**Lance Roberts** (2:20)
Well, again, things are always in the short-term very psychological.
You know, there's a particular trade that's going on or whatever is happening, right? So, either up or down, right? So, you know, and it kind of draws in investors into that, right? So, I will, you know, AI had a great trade last year, got extremely overbought. So, we've been going through this correctional process. And, you know, if you actually look at, you know, strip away the data move, right, in terms of the price move on Friday and or on Thursday. And if I said, let's just go look at that, these numbers of these companies. And I'm going to tell you the name of the companies are. If I told you there was a company that was trading at a 22 times forward PE with a PEG ratio of one that was growing earnings at 39% a year, you go, I want to own that company. Well, that's Microsoft. And, you know, and so, you know, the earnings for these companies are stellar, but they, you know, as I've noted many times here with you over the last couple of months, expectations for 2026 in terms of earnings growth and those type of things are extremely optimistic.
So any little bit of a miss, which is in Microsoft's case, this is all it was, was kind of a little bit lighter guidance than what the street was expecting. And so you have this immediate knee-jerk algorithmic move of, you know, assets getting dumped. And again, if you looked at the price action yesterday, the stock was down about 12 percent enter day. And every time it got down to that level, you saw a lot of buying coming into the stock. So buyers were there to pick up the stock price. The stock closed down like 9 percent, 9.5 percent by the end of the day. So you saw that buying into the stock at that level. So, you know, investors that are paying attention to valuations, they're starting to accumulate shares of these companies at these levels. And again, this goes back to our conversation last week. Investors want to buy what's going through the roof, but they don't want to buy what's coming down, which is becoming a much better value. And so there's a lot of these companies now that are getting relatively cheap on a fundamental basis. You should be wanting to buy them, but instead, you're chasing other assets.