Guggenheim’s Minerd Says ‘Significant Correction’ Is Coming

  • Stock bear market is still unlikely, $260 billion manager says
  • Total Return Bond Fund has outperformed 96% of its competitors

Guggenheim's Minerd Warns of 'Significant Correction'

Expect a “significant correction” in U.S. stocks as disappointment sets in over President Donald Trump’s ability to enact policies and concerns rise over risks in foreign relations, according to Guggenheim Partners’ Scott Minerd.

“I’m thinking we will have a significant correction in the summer or early in the fall,” Minerd, who oversees $260 billion as Guggenheim’s chief investment officer, said Wednesday in a Bloomberg Television interview. “I don’t think this will be a bear market. I think the great bull market is still intact.”

U.S. stocks fell for a second consecutive day as volatility climbed across asset classes. The S&P 500 Index declined 0.4 percent and is down 1.9 percent since reaching an all-time high on March 1. The broad benchmark is still up almost 10 percent since the Nov. 8 election as investors experienced what Minerd called a “sugar high” on expectations that Trump’s policies would spur growth and tax reforms.

Minerd trotted out the Wall Street adage that investors should “sell in May and go away,” adding that the time to reinvest is around the first game of baseball’s World Series in late October. While there’s still considerable uncertainty around Trump’s policies, relations with Russia and North Korea and elections in France, Minerd expects the U.S. economy to continue growing and the stock market to keep rising -- as much as 20 percent over the next two years.

Minerd’s flagship $5.7 billion Guggenheim Total Return Bond Fund is up 2.4 percent this year, outperforming 93 percent of its peers, according to data compiled by Bloomberg. It’s averaged 5.8 percent annual returns over the past five years, beating 96 percent of its peers.