Selloff Not Showing Signs of a Growth Scare, Newedge Wealth's Dawson Says

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00:00Cameron Dawson of New Edge Wealth writing, we see this as a valuation and positioning

00:03recalibration, not a growth scare, which implies a shorter and shallower correction.

00:08Cameron joins us now for more. Cameron, good morning.

00:10Good morning.

00:11How do you draw a distinction between one and the other?

00:13Yeah, so what we think about is when you have a growth scare, it tends to lead to a deeper,

00:18more protracted correction. You're cutting EPS estimates, you're cutting GDP estimates.

00:22There's a lot of positioning to shake out. But at this time, we're not seeing signs that EPS

00:27or GDP estimates necessarily need to get cut for 2026. We think that they are very fully calibrated

00:33at this time, so we don't see a lot of upside to them, which suggests to us that this correction

00:38could continue. But it doesn't necessarily mean that we go into something that's greater than the

00:4410 percent kind of drawdown that you would see in a deeper correction.

00:46What do you think we need to see in the coming weeks, the coming month to put a floor on the

00:50sentiment? So we think that we need to see a little bit of the weaker hand shaken out. What we saw with

00:56retail investors is a big 35 percent jump in FINRA margin loan balances over the course of the

01:01last six months. This suggests that there was just a ton of risk taking that happened really over the

01:06last two months. September and October, we've been calling it silly season. There was no reason for stocks

01:11to rally 30, 40, 50 percent in just two months alone. So a lot of this is just a recalibration out of that

01:17silly season into more rationality. But it doesn't suggest that maybe today is the ultimate low. We still think

01:23that we could see some volatility. Are you buying? For some accounts, yes. Look, at the end of the day,

01:29we always keep a book next to our desk, which is Walter Diemers. When it comes time to buy, you won't

01:33want to, which just means that the narrative will suggest that you should stay on the sidelines of

01:38the market. Of course, it's scary. But we do know that forward returns get better as markets correct.

01:43And if we do see a correction down to, let's say, the 200 day moving average, the narratives will get even

01:48scarier. But that's an even greater opportunity to be able to put capital to work. Because at that

01:52point, you've seen valuations come into a little bit more of a reasonable territory, as well as the

01:57fact that positioning likely would get a lot lighter.