The market is in the early stages of a decline.
Money manager Dan Suzuki of Richard Bernstein Advisors warns that the group is in a bubble despite Monday's tech comeback.
Look at the history of bubbles. They don't softly correct and are off to the races six months later. A major correction is typically 50% or more. The firm's deputy chief investment officer told CNBC that it comes with an overshoot.
The Federal Reserve will hold a two-day policy meeting this week. Wall Street is expecting a half-point hike on Wednesday. Guidance will be the biggest wild card according to Suzuki.
Suzuki is a former Bank of America-Merrill Lynch market strategist.
The tech bubble call was made by Suzuki and his firm. A rising interest environment will hurt growth stocks, according to the forecast.
The Nasdaq had its worst month since 2008. On Monday, the tech-heavy index jumped 1.6%. It is still off almost 23% from its all-time high.
Suzuki is still invested in stocks.
Suzuki is taking a barbell approach to weather a crash. He likes stocks that benefit in an inflationary environment, particularly energy, materials and financials. On the other side, he lists defensive stocks.
He said that most of the inflation beneficiaries come with a lot of cyclicality.
Suzuki acknowledges that investors are paying a premium for safer trades. He believes it is worth it.
If you look at the last 20 to 30 years of bear markets, look at the starting point valuations for defensive stocks. They are always expensive going into a bear market.
There is no truth to this.
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