Why Iran could end the bull market

Investors entered 2026 with fairly confident expectations, but the war with Iran has turned Wall Street sentiment on its head. Kenny Polcari, CEO and CIO of BD8 Capital Partners, Barbara Doran, Barron's Investor Circle Newsletter Editor, Josh Schafer, and Former Ellevest VP of People, Amanda Polcari, discuss the real concern for investors.

Welcome to Trader Talk. I'm Kenny Pulcari, and today we're having another very interesting conversation. On the panel is my daughter, Amanda Pulcari, representing the millennials. Then there's Barbara Duran, chief, uh, she's actually the chief executive officer of BDA Capital Management, and then on the end is Josh Schaeffer, who is the editor of the Barron's Investment.Circle. Very, very interesting, uh, concept. We're gonna talk a little bit about that considering, uh, Baron's always, you know, never really reached out to that age group, but now they've got Josh, so we'll talk about it. In any event, uh, Barbara, let's start with you because coming into this year, we kind of started where markets were fully valued, right? Not overvalued, not undervalued, but fairly valued.Uh, and, and I don't know about you, but kind of what's happened since wasn't in my playbook in January.

I don't think it was in anybody's playbook, you know, when we came into the year, people were, you know, skeptical, but, but fairly confident because we would go into the 4th year of a bull market, right? But what you've seen is the progression of earnings that were double digit were getting better quarter by quarter. And of course, company guidance in the last quarterly, um, earnings reports were.Positive. So it looked like we were going to see not only double digit earnings growth, but that margins would continue to improve. So because the tariff, remember last year with all the tariff uncertainty, but even there, you still would see some inflationary effects, but it was manageable and would probably be one time. So, and of course then we had fiscal stimulus, we had monetary stimulus, all the tax refunds coming in, deregulation of the banks. It all looked like a fairly positive.Set up, even though it is unusual to have 4 years of a bull market. And of course, you know, the Iranian situation has blown that all apart. I mean, the bull market thesis at the moment is still intact because I think there's still, and maybe we're all being complacent, but the feeling is that, you know, the president, you know, will get out. I don't think maybe they thought this was going to be a Venezuela in and out, in and out, yeah, but, you know, we do know.They're very worried about the midterms, special elections. They've been losing them all, and affordability is the issue. And if oil prices continue to stay high, we know how that feeds through the system, particularly in logistics and energy is part of everything we do in this economy. If it stays elevated, it could be a problem, and you're not seeing earnings cuts yet, but it could happen

interesting because earnings season starts just in a couple of weeks. And so if you're going to start to see cuts.You would have, we would have already started to see them, and we're not seeing them. So to me, that suggests that, you know, analysts, uh, are still confident in kind of what the future looks like.

Yeah, I think that that's what one would think, but we also know they don't have enough information like we don't. You know, if it ends pretty quickly, you know, there's still real oil prices come right back down. They certainly would come down a lot, but you would see a lagged impact, then the market would shrug off and say, OK, that's gonna be one time, it's manageable. And what do the companies do? We know that a lot of companies are already.Look at diversifying their supply routes. You know, they are already factoring in higher input costs, but right now it looks like it will be temporary. We don't know though, right? But Amanda,

so, so, so tell us what's on top of mind for you? What are you concerned about either with the economy, with, with Iran, with the midterm elections? Like where, where do you sit in all that?

I mean, I think ultimately, I'm really just trying to figure out how to, where are the opportunities, where should I be maybe doubling down or where should I be diversifying my portfolio, given all of this, um, does it change what we talked about at the beginning of the year? Do I need to make, are there, are there just more opportunities that I haven't, didn't, didn't think of it, maybe at the end of last year that now given everything that's happening and given my time horizon, um, are there things I should be capitalizingon?

Yeah, well, I think that seems very smart because it's been a buy on weakness for the last few years. And of course, I think what's happening now, you're probably seeing a lot of De La Regina margin.And the interesting thing and maybe concerning is that last week for the first time you saw 2 days of net selling, and that was retail, you know, so I think that this buy on weakness has been very rocky and so that's what I, yeah,

so let me ask you a question. Do you think that those 2 days of net selling is people now starting to throw in the towel and get nervous, or do you think that it's end of quarter and it's tax season because tax season April 15th is only 3 weeks away. So there's typically pressure on the market.Market at this time of the year to begin with. And I think once April 1st comes and we get through the marking period at the end of the 1st quarter, I think a lot of that pressure goesaway.

Kenny, it's, I think that's a really good point because if you look at the volume even Thursday, which was a massive down day, it was pretty thin. So it's not that there's this wholesale puking out of positions. It's really more on hold. OK, where do we go from here? And, and we want to buy, we want to buy. Like even Nvidia, you saw us up 30, 70, was the most actively trading, I should say.37 days in a row. So people are eager to do something, but isn't clear, right? Like Amandajust said,

right? So Josh, talk to us about now you're at the investor circle. What's happening there? What are you seeing? What, what's the information you're gathering from, you know, people that are subscribing?

Yeah, so, so we at, at the investor circle, we have a team of former equity analysts that are sort of picking stocks for us. We also have an in-house technician who in times like this is very interesting to talk to, right? Our guy Doug.Bush has certain levels that he's looking at and that type of thing. But I think what we've sort of been gathering is, OK, we're talking about all these risks, right? There's a chance maybe the Fed doesn't cut it all this year. How do we get into areas of the market that aren't as interest rate sensitive, right? Where are there opportunities like that? Where are there opportunities within software? If you look at just Barns's stock picks over the last month, we came out and said we'd be buyers of Octa here. We'd be buyers of Microsoft at these levels. I mean, our cover story a couple of weeks.weeks ago was Microsoft simply honestly off a basis of its valuation is at its lowest compared to the S&P 510 years, right? And do you think Microsoft is really going away in this software itself again, a long-term investing perspective, right? Not a trade, but I don't think Microsoft is going away in the next 5

to 10

years.

It's down 36% off its high. It's down 20% year to date, but 36% off its high, and I agree with you. I think it's a screaming.I think it's a

and what we're trying to tell subscribers though with that is you do have a lot of headline risk right now. So we're saying get into Microsoft. It might be choppy for a couple of weeks, really even a couple of months at this point, right? We're still in a headline-driven market. We're watching oil every day. So it's not like this is instantly going to work right now. But over the long run, we think there's opportunities in some of those things. And

so the other thing I always tell clients, and especially, you know, maybe younger people that you're advising is that.You're not gonna, you're not gonna take all your money today, all the money you have allocated and say, I'm gonna buy it all today in Microsoft. Absolutely not. You're gonna dollar cost average. You're gonna take advantage of the swings in the market. And even if, if it swings higher, next month, you want to put a little bit more to work, that's OK. You're just gonna use the same dollar amount. You're gonna buy a little bit less at the higher prices, but you're gonna buy more if it backs off. And, and

Microsoft feels pretty safe. Like, where, where, where can we take a little more risk, I think is the question that.I don't know, Josh. I don't wanna speak for you, but I, I'm definitely asking.

Yeah, no, I think because what the view you're talking about is a longer term view, you know, and saying, so if it goes down, I'm always the camp. I'd rather be a little early. I don't care if it goes down a little bit, but I want to be there for when it continues its ascent.

I agree, which is why I think now is a perfect opportunity to start to look at some of these names that have really gotten beaten up. And, you know, to Amanda's point, it's great names like Microsoft, they're safe, but you know, she's got more time, right? You.These guys are much younger than, than I am, right? I'll speak for myself. You're much younger than I am and so you've got time on your side. And, you know, it's the usual, it's time in the market, not timing the market, trying to pick tops and bottoms. But I think you have to be, especially even if a man of your age, you still have to be selective on building a strong enough portfolio, uh, that's going to weather the storm. And then around the fridges, you can take a little bit more risk if you want, because you have time to do that.Yeah, I may not,

right? I, I think on the riski