This video discusses the speaker's prediction of an upcoming market dip and advises viewers on how to prepare their portfolios accordingly. The speaker analyzes market trends, valuation concerns, seasonality, and investor behavior to support his prediction.
To illustrate the stretched valuation of the S&P 500, Mark Roussin uses data from Yordini Research showing that the S&P 500 trades at a forward PE multiple above 22, while the 10-year average is closer to 18. He also points out a similar separation in the S&P 500 multiple to what was seen during the pandemic and right before the start of 2022, both preceding market declines. He further highlights a similar situation in the communication services and technology sectors, with a combined multiple around 27, exceeding levels that preceded market drops in 2022 and late 2024.
The "September effect" refers to the historical tendency of the S&P 500 to underperform in September. According to the speaker, this is partly due to the end of summer activities and vacations, allowing money managers to reassess their portfolios and realize profits. A second, more significant reason, in his opinion, is tax-loss harvesting, where managers sell winners to offset losses, increasing the number of sellers and depressing prices.
Besides valuation concerns and September's seasonality, Mark Roussin cites increased profit-taking among investors, a notable shift of funds into money market accounts (indicating a risk-averse sentiment), and a recent surge in gold prices (a traditional safe haven asset) as additional reasons for anticipating a market dip. He also points to recent stagnation in the S&P 500 and renewed concerns about tariffs, economic growth, and the jobs market.
Mark Roussin recommends the SCHD ETF as a defensive investment option. He highlights its approximately 4% dividend yield with near 10% annual growth, and its sector breakdown featuring significant holdings in staples, energy, and healthcare sectors – all considered relatively defensive. He emphasizes that SCHD is built to be defensive, making it suitable given the speaker's assessment of the shaky and stretched market conditions.
