Interview with Market Technician Jeffrey Bierman
LINK to MarketWatch article: MarketWatch article
Warren Buffett, the voice of reason in the stock market, recently announced that he was retiring at the end of 2025. “He was like the Rock of Gibraltar,” says Jeff Bierman, chief market technician at Theo Trade and an adjunct professor of finance at Loyola University Chicago. “Losing him concerns me. It marks the end of an era of old school fundamentals that used to drive the markets until the early nineties. It’s a sad chapter that is closing, but at the same time, it opens up a Pandora’s box for much more volatility going forward.”
The Pandora box, according to Bierman, is a “mercurial president where on any given day, there can be a tweet, a social media post, or a television appearance where one word from him drives order flow. Each morning, I wake up and wonder what he’s going to do to torch my portfolio or lift it up.”
Bierman says he worries about the unpredictability of President Trump. “To me, that is the perfect storm of a market that will remain volatile for at least the rest of the year. Trump is like the sun and everything revolves around him. Because of that, both professional and retail investors alike are constantly on pins and needles.”
In this recent interview, which has been edited for length and clarity, Bierman discussed his views about the market, including stocks he is buying and what he’s avoiding.
MarketWatch: In our last interview, you warned about a volatile stock market. Have you ever seen a stock market as volatile as this?
Bierman: Not where one individual has such an impact on the market and not where so many asset classes are offered. I’ve seen volatile markets, but I haven’t seen a market quite like this where one single individual has the power to drive order flow.
MarketWatch: What should traders and investors do when the market is so unpredictable?
Bierman: Trade small. Don’t be fully invested at all times in one single product. Also, the indexes are likely to underperform for the next few years. For the last hundred years, the indexes have delivered an 8 percent return. Prior to this year, three out of four years, the S&P 500 was up 20%. The likelihood of that repeating itself is nearly impossible statistically. So, investors need to recalibrate their expectations. If you can get a 5% to 6% return over the next three to four years, you’ve done very well.
MarketWatch: Do you have any other advice for traders and investors?
Bierman: Cut down your position size. If you’ve been holding concentrated positions of 10%, you want to cut those in half. Also, consider international markets, or moving your money into precious metals such as gold and silver. You could consider moving your money into commodities that have been beaten down --- such as oil. Oil will eventually find its bottom,w which should provide good cash flow and dividends.
MarketWatch: In our last interview several months ago, you said if we take out 5,600 on the S&P 500, we would go to 5,200. We are now a little above 5,800. What do you say now?
Bierman: We did take out 5,600 and went down to 4,800. Now, we have circled back to 5,800. Let me put it in perspective: The all-time high on the S&P 500 is 6,147. Then we went down to 4,800, which is a decline of approximately 21%. We have retraced a little more than 61.8% of that, which is a normal Fibonacci retracement sequence. Nobody knows what will happen next.
MarketWatch: Although you don’t make predictions, what are the possible scenarios?
Bierman: I think the momentum is behind the market, although it is overextended. We could push higher, but to push back to all-time highs, you’re going to need tailwinds. We will need the Fed to cut rates, which they might do in the early part of summer. We also need for inflation to come down. We also need to get more clarity on the financial impact of tariffs, and tailwinds from technology and financials. The good news is we have tailwinds from financials, but they are now near fully priced.
MarketWatch: What if the S&P doesn’t make it past 5,900? What could happen?
Bierman: If we don’t push past 5,900, the S&P 500 could fall to 5,200. To make it past 5,900, you need a lot of liquidity, which you don’t have. You need a lot of tailwinds, which you don’t have. And you will need the president to be less volatile and back off his aggressive tariff agenda. I’m telling you we are at a critical juncture where the market could retest the high. Nevertheless, it would not surprise me to see the S&P 500 retest the intermediate low between 5,200 and 4,800. That is a real possibility.
MarketWatch: Are there any particular stocks that you think are worth buying?
Bierman: I happen to like financial stocks such as JPMorgan (JPM), Goldman Sachs (GS), Visa (V), Mastercard (MA), and PayPal (PYPL). They are all good places to park your money. I like financials with steady cash flow, decent dividends and relatively below average multiples. The financials should not be as impacted by the tariffs compared to other sectors. I also like pharmaceutical stocks such as Bristol Myers Squibb (BMY). They delivered much better-than-expected earnings and the valuation is compelling. I also like Merck, which had great earnings. I also like Baxter International (BAX) even though the dividend is not as compelling but has decent upside.
MarketWatch: Are there any stocks you don’t like and would avoid?
Bierman: I think Walmart is in a bubble and Costco is ridiculously expensive, but I think there’s compelling value in Target (TGT), BJ Wholesale (BJ), and TJ Maxx (TJX). I also think much of the AI trade has been played out. I think you need exposure to AI but not to be overweight. Many high-profile companies are cutting back on their spending budgets and resorting to layoffs as a result of the uncertainty around the economy, and that could trickle into AI.
MarketWatch: In our last interview, you said you were buying semiconductors. Are you still buying those?
Bierman: No, I’m holding off on most semiconductors at this point, but I do see compelling value in On Semiconductor (ON), Western Digital (WDC), and Storage Technology (STX), and Dell Computer (DELL).
MarketWatch: Are there other investments you are recommending?
Bierman: You need some exposure to fixed income, whether it’s an annuity or a short-term bond. I don’t like long-term bonds due to their elevated exposure to interest rate risk and lack of liquidity premium. I’d suggest short-term bonds or bond mutual funds. For stock market investors I would tilt more towards large cap stocks away from small cap stocks because small caps tend to lead to the downside in an economic slowdown. I’ve been moving more towards dividend intensive stocks for protection.
MarketWatch: Is there anything about the stock market that people don’t know?
Bierman: Liquidity in this market is about as thin as it has been in many years. Insiders are not buying with conviction. If insiders are not buying with conviction, it is not a vote of confidence for the market going forward. Most fund managers are buying rather selectively. Right now, 20 to 30 stocks are carrying the market higher while the other 470 stocks are underweight or just left behind. It gives an image that the market is healthy when it’s really not on solid footing. Because of the relative scarcity of liquidity, I would not rule out a 2009-style flash crash either.