Why Stock Bulls Are Betting Big on Kevin Warsh at the Fed
Veteran investor Bob Doll warns the current bull run is 'high-risk' and hinges on who leads the Federal Reserve next.
If you've been riding the stock market's recent wave higher, here's something to keep in mind: veteran Wall Street investor Bob Doll thinks the whole rally is sitting on shaky ground — and the outcome could depend heavily on who ends up running the Federal Reserve.
Doll, who serves as CEO of Crossmark Global Investments, is calling the current bull market "high-risk." That's not exactly the kind of language that makes you sleep easy at night. In his view, the bullish case for stocks needs Federal Reserve Chair Kevin Warsh in its corner to have a real shot at continuing.
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Warsh, a former Fed governor, is widely mentioned as a potential future Fed chair. His monetary policy philosophy matters enormously to markets because the Fed's decisions on interest rates ripple through everything — from mortgage costs to corporate borrowing to the price-to-earnings multiples investors are willing to pay for stocks. In plain English: a Fed-friendly to growth could keep the party going, while a more hawkish posture could crash it.
Doll's warning is a useful gut-check for everyday investors who might be feeling pretty good about their portfolios right now. Bull markets have a way of making risk feel invisible — right up until it isn't. When a seasoned market veteran slaps the label "high-risk" on a rally, it's worth pausing to ask whether your own investment mix reflects that reality.
The broader takeaway here is that monetary policy remains the single biggest wild card hanging over equities, and personnel decisions at the Fed carry enormous consequences for your 401(k). Continue reading at MarketWatch.com
