Why Won’t the Stock Market Go Down?
Speakers
Summary
- The US economy is highly insulated from Middle East oil shocks due to domestic energy independence and lower household energy dependency (energy is now 6-7% of household budgets vs. 12% in the 1970s).
- Geopolitical risk premiums in Gold are likely fully priced in, making a plateau or decline more probable than another massive rally.
- Spiking oil prices will likely keep inflation sticky, taking Federal Reserve rate cuts off the table for the near future.
- Financial markets act as a real-time check on executive policy; a 15-20% market drop usually forces political leaders to pivot on aggressive policies like tariffs.
- Investors holding massive concentrated positions in single stocks (even diversified holding companies like Berkshire Hathaway) are taking unnecessary risks and should diversify, regardless of capital gains taxes.
Trade Ideas
"The US is energy independent... when you look at the household budget, energy as a percentage of that budget in the 70s was 12%. Now energy is something like 7% or 6%." Because the US produces its own energy and consumers are less reliant on it, domestic equities will shrug off Middle East conflict and oil spikes much faster than they did in previous decades. The initial panic selloffs are buying opportunities. LONG SPY because the underlying US economy is structurally protected from overseas energy shocks, allowing the broad market to absorb geopolitical hits. A severe escalation that drags the US military into a prolonged conflict, or oil spiking so high (e.g., well over $100) that it breaks consumer sentiment regardless of the lower budget percentage.
When asked what will be higher a year from now between energy stocks, tech stocks, or gold, Ben replies, "If it was like say software stocks, it seems like that would be the easiest one." Despite geopolitical noise and commodity volatility, the secular growth and earnings power of the technology and software sectors remain the most reliable drivers of capital appreciation over a 12-month horizon. LONG IGV / XLK as software and tech offer the clearest path to growth, independent of messy macro and geopolitical variables. A sudden spike in interest rates (due to inflation/oil) could compress the valuation multiples of high-growth software companies.
"How much of all the geopolitical mayhem... is already priced in? I think the path of least resistance is plateau or lower, not doubling from here." Gold has already experienced a massive run-up by pricing in wars, tariffs, and political chaos. Once the market realizes these crises are not escalating into worst-case scenarios, the safe-haven premium will evaporate, capping gold's upside. AVOID GLD because the geopolitical fear trade is crowded and fully priced, leaving limited room for further upside. A true "black swan" event (e.g., China invading Taiwan or a massive US policy failure) that triggers a new, unpriced wave of global panic buying.
When asked if rate cuts are off the table for the time being due to spiking oil prices, Barry answers, "Oh, for sure. Yes." Higher oil prices feed directly into headline inflation. If inflation remains sticky or accelerates due to energy costs, the Federal Reserve cannot cut interest rates, which will keep long-duration bond yields high and prices low. AVOID TLT because the macroeconomic environment (resilient economy + energy shocks) supports a "higher for longer" interest rate regime. A sudden, severe recession or labor market collapse that forces the Fed to cut rates aggressively regardless of energy prices.
"I do not buy this argument that you can look through to the cash on their balance sheet as part of yours because you have no ability to tap that liquidity... That stock can still fall regardless of how high the cash level is." Retail investors often use mental accounting to justify dangerous portfolio concentration (e.g., treating Berkshire's cash pile as their own fixed income). However, idiosyncratic equity risk remains; if the broader market drops, these specific stocks will still suffer equity-like drawdowns. NEUTRAL BRK.B / PLD for concentrated holders. Investors should sell down oversized positions to buy broad index funds or actual fixed income, even if it triggers capital gains taxes. The specific companies could heavily outperform the broader market, causing the investor to miss out on excess returns and pay unnecessary taxes.
Up Next
This The Compound News video, published March 11, 2026, features Barry Ritholtz, Ben Carlson, Blair duQuesnay discussing SPY, IGV, XLK, GLD, TLT, BRK.B, PLD. 5 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Barry Ritholtz, Ben Carlson, Blair duQuesnay · Tickers: SPY, IGV, XLK, GLD, TLT, BRK.B, PLD