01-08-2025
The stock market is turning into a casino — raise cash, and also buy this AI company, says strategist
The stock market has become a casino full of gamblers and now's the time for caution.
So says our call of the day from the president of market research firm Lamoureux & Co., Yves Lamoureux, who has switched from 'extremely bullish' to neutral on stocks because of a powerful rally seen this year.
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'It's very rare to see a market rally this dramatically, so one part of the change in my view is because of the behavior of this market,' the forecaster who has made prescient past calls told MarketWatch on Tuesday.
In early April, just as tariff fears were hammering stocks, Lamoureux told MarketWatch he expected upside surprises ahead, maybe within six months, but the speed of the bounce has shocked him.
'I've argued for 50,000 when the market was really, really low,' he said —his past call was for the Dow industrials DJIA to reach 50,000 by 2027. 'Well, look we got to 45,000, we were almost at 46,000, so I'm very close to my target. But rather than doing this thing in say, one year, we've done this in just what two months? It's crazy.'
Lamoureux said that's 'a sign that gambling is back, risk-taking is back and I don't see risk-taking as a good sign.' He noted the resurgence of meme stock mania and record trading in extremely short-dated options contracts.
'What I see today is now very similar to 2021. People are in the market, they're gambling, they don't know what they're doing and that's why my stance is really to look forward,' he said.
The forecaster sees a 'topping process' ahead, which means stocks could move sideways for couple of years. 'A topping process means that maybe we don't go higher than the 45,000 on the Dow for maybe the next two to three years,' he said.
'So when there's risk, you have to take some money off the table. I'm not saying to go cash completely, I'm just saying you have to reduce your portfolio and build back some cash,' to buy stocks when they get cheaper, he said.
He suggests investors raise cash gradually, just as he did in November before the market pulled back. 'When things start to drop, you scale in. You buy a little bit and it goes down, you buy a little bit more, it goes down, buy a little bit more. Same thing the other way when it goes up. When it goes up and you don't know when to sell, you scale out,' he said.
Montreal-based Lamoureux says higher inflation will make interest rates cuts challenging. 'I'm expecting inflation to move up in 2026 and in 2027, so if inflation moves up, the whole structure of the market isn't very safe.'
He has previously maintained the 10-year Treasury yield BX:TMUBMUSD10Y could reach 6% to 7% further out, but sees 6% likely in 2026. That's as companies that have been losing money by absorbing tariffs, will 'gradually' start to pass that onto customers, he said. He also flags a global fee agreed this year on greenhouse gases targeting shipping to 'increase the cost of everything.'
Among other problems, he flags that many U.S. companies are simply carrying too much debt.
'If rates keep climbing, they're in trouble,' he said, adding that he prefers 'companies in tech that have cash and pay no dividends because they're investing in their business.'
One name he likes is Nebius Group NBIS a Dutch-based AI infrastructure company, as 'one of the best pure plays,' which Goldman Sachs initiated with a buy rating earlier this month.
'They hold a portfolio of AI assets, so they have many companies related to AI,' he said, noting that one of Nebius' investments is privately held ClickHouse, a database that stores and quickly analyzes big batches of data.
'This portfolio of different AI companies they have gives them a lot of upside,' Lamoureux said. 'I would stick my neck out to say, 'Hey, I really like this and I would buy even if the market is volatile.''
Read: Why the man behind 'The Hater's Guide to the AI Bubble' thinks Wall Street's hottest trade will go bust
U.S. stock futures YM00ES00 NQ00 have pared gains post data as a Fed meeting looms. Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y are rising, and the dollar DXY is higher as well.
Key asset performance
Last
5d
1m
YTD
1y
S&P 500
6370.86
0.97%
2.79%
8.32%
17.19%
Nasdaq Composite
21,098.29
0.98%
4.43%
9.26%
23.04%
10-year Treasury
4.33
-5.80
4.60
-24.60
29.50
Gold
3325.1
-2.13%
-1.29%
25.98%
33.36%
Oil
69.16
5.67%
5.54%
-3.77%
-8.12%
Data: MarketWatch. Treasury yields change expressed in basis points
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These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker
Security name
NVDA
Nvidia
TSLA
Tesla
GME
GameStop
AMD
Advanced Micro Devices
PLTR
Palantir Technologies
PLUS
EPlus
NVO
Novo Nordisk
SOFI
SoFi Technologies
OPEN
Opendoor Technologies
NIO
NIO
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