The Crash Prophets Are Missing the Point
Why JPMorgan’s CEO is right about the risk, but wrong about the lesson for real investors.
Another day, another warning from a financial titan. Jamie Dimon, CEO of JPMorgan Chase, is sounding the alarm, suggesting the odds of a US stock market crash are higher than many believe. He points to a familiar litany of worries: geopolitics, fiscal spending, and global remilitarization.
He’s not wrong to be concerned. Uncertainty is the one certainty in our business.
But as a professional wealth manager, the focus isn’t on predicting when the music will stop. The job is to ensure clients aren’t playing a reckless game of musical chairs when it does. The frantic debate over the exact timing of the next crash—whether in six months or two years—is a distraction from the core principles of sound investing.
Investors Are Not Traders. Know Which One You Are.
This is the most critical, and most often ignored, distinction in finance.
An investor is a business owner. We buy stakes in undervalued companies with durable competitive advantages, solid free cash flow, and the potential to compound wealth over years and decades. Our decisions are grounded in research, analysis, and a relentless pursuit of value. We are not swayed by daily price motions; we are fortified by balance sheets.
A trader, on the other hand, is a speculator on price motion. They will enthusiastically buy an overpriced AI or cannabis stock if the chart suggests the bullish trend, i.e., net buying from others, will continue. They operate on the belief that they can be faster than everyone else to the exit when sentiment sours. It’s a high-stakes game, and history shows that while a few win, most do not.
As a wise colleague once told me, the easiest stock to sell is to a salesperson—the perpetual optimist who loves a good story more than a hard fact.
My Gauge for Market Sentiment: The “Story Stock” Basket
For months, I’ve noted that global markets have been what we in the industry call “frothy.” Speculation is elevated, often untethered from fundamental value. This isn’t a crash warning because I am not one of those doomsayer’s who screams for attention. It’s a statement about investor sentiment. To monitor this sentiment, I use a bellwether list of stocks in my analysis.
Initially, I looked at the “Magnificent 7.” But their colossal cash reserves make them resilient, unlikely to show weakness until a downturn is already well underway. So, I refined my list. My current bellwether—let’s call it the “R-12 file in my weekly Navigator report”—is now composed of stocks like ARGX, ASTS, and NET (you can see the full list here).
These are not penny stocks. They are companies with market caps in the multi-billions, many with legitimate prospects. I am even invested in some. However, they are also the darlings of the speculative trading crowd, often priced for perfection and, to my point, well beyond.
The Real Bell That Will Ring
I don’t know when the next intermediate-term bear phase will begin. But I have a hypothesis: it will be signaled not by a doomsayer’s prediction, but by a notable, sustained sell-off in these very promising, yet unproven, “story stocks.”
When the traders who propelled them higher head for the exits en masse, it will be a clear indicator that speculative fever is breaking. At that point, true investors may pull their bids, refusing to catch the falling knife. This is when account balances built on narrative usually get crushed.
My strategy is not to predict this moment, but to be prepared for it. We will watch the prices of these bellwether stocks and the broader market’s reaction. The market itself, not the gurus, will tell us what is happening.
In the timeless words of Ecclesiastes, there is a season for everything. Our task is to recognize the season when investors once again ignore the noise and return to buying wonderful companies at sensible prices. That is the season we patiently await.
Stay disciplined,
p.s., I’m taking it easy today as I’m still on painkillers and antibiotics three times a day following a dental visit.