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Cresset Capital’s Jack Ablin believes investors with an appetite for big risks could get burned.
Ablin, who has $5.4 billion in assets under management, warns the market is vulnerable to a significant correction by early next year.
“I believe we’re entering a cyclical downturn,” the firm’s chief investment officer told CNBC’s “Trading Nation” on Thursday. “The market could respond downward 10 to 15%.”
The Dow battled back from negative territory on Thursday. After dropping as much as 335 points, the index closed up 122 points and reversed a two-day losing streak. However, just three days into the fourth quarter, the index is still down more than 700 points and is 4.4% off its record high.
To protect his portfolio from wild market swings, Ablin has moved away from his typical investment strategy. Instead of depending completely on stocks for gains, he shifted 30% of his assets to private equity and cash in August.
“The economic condition here at home isn’t really too conducive for risk-taking,” he said. “The manufacturing ISM came in lousy. We saw nonmanufacturing slightly better, but still disappointing.”
He’s also worried about headline risks surrounding the U.S.-China trade war, efforts to impeach President Donald Trump, and the 2020 election.
“As a data guy, it’s really hard to navigate the headlines,” he said.
Despite the rough start and his pullback concerns, Ablin isn’t preparing to stay conservative. He’s looking to eventually take advantage of market trouble.
“That would allow us to take some of the dry powder that we’ve put aside over the last several months and redeploy it back into the market,” Ablin said.