This 30-year market veteran is alarmed by a record-chasing S&P 500. Here's where he's investing instead.

By Barbara Kollmeyer

Steven Jon Kaplan says investors are ignoring the safety of bonds right now

An investor employing cold logic like a Vulcan in "Star Trek" would be befuddled by what he is currently seeing.

That's according to newsletter editor Steven Jon Kaplan, who is alarmed by what he sees as investors piling into stocks without much thought.

"You want to be totally [logical] if you can, and everybody around you will laugh at you or think you're crazy, but that's really the way that people should be thinking of their investing - as a Mr. Spock from 'Star Trek,' " Kaplan, who has been writing the newsletter True Contrarian for about 30 years, told MarketWatch in an interview.

While the stock market appears to have hit a rough patch over artificial-intelligence investment and inflation worries, Kaplan noted the S&P 500 SPX still isn't far from an all-time high. "So people are crowding more and more, not because there's any value or logic in it, but just because everybody else is doing it."

Kaplan's pessimism isn't new. He warned in early 2025 of a "lost decade" for U.S. stocks, and had already been fretting a year before. However, he's also made timely past warnings of technology selloffs and advised investors to buy equities during an early stage of the pandemic.

One market dynamic that worries him right now is what he views as the outnumbering of traditional value hunters by technicals- or momentum-based investors. "As they become more numerous, I think you're starting to see more and more people that are chasing after anything regardless of price," he said.

"I think it's an underrated shift, and I think what's going to happen in the next decade or so is we're going to have a massive sort of revenge of the value and contrarian investors as the ones that are chasing after everything are going to end up having some pretty big losses along the line," Kaplan said.

In the nearer term, he cautioned, even a small amount of S&P 500 underperformance could trigger that momentum crowd to flee, speeding up a selloff. He is also concerned at the selling among company insiders this year at tech names such as Amazon, Nvidia and Tesla.

Kaplan hasn't completely ignored stocks, though, and is always on the lookout for bargains. During the April 2025 pullback, he bought battered energy names Transocean (RIG) and Patterson-UTI Energy (PTEN), as he noted company insiders buying those stocks for the first time since the pandemic. The stocks went on to surge into 2026, and he exited after big rallies. He also has a small position in fast-food chain Wendy's (WEN) and chemical group Huntsman (HUN).

The veteran investor started to recommend that investors buy stocks in Korea EWY and Brazil EWZ as early as January 2025 - timely advice as those markets rose into 2026. He switched to a sell recommendation on both in January as the dollar index DXY was at a four-year low and he didn't see that tailwind persisting.

Kaplan's biggest conviction call right now is 30-year Treasury inflation-protected securities, or TIPS, which are government-issued bonds that provide protection for investors against inflation. In addition to monthly principal adjustments tied to consumer prices, the government pays a fixed real interest rate. The yield on those is at 3.32%, roughly triple its historical average, he said.

"This amazing investment is being ignored because it's so out of favor and because the stock market is so popular," he said.

One option is the Pimco 15+ Year U.S. TIPS Index exchange-traded fund LTPZ, where he said a 120% to 130% capital gain is possible if yields just go back to the levels of a couple of years ago. Investors can also buy directly from the government via auctions, or the secondary market for those TIPS, which are available from most brokers.

Kaplan is also a fan of "locking in" yields right on 2- and 3-year Treasury notes BX:TMUBMUSD02Y BX:TMUBMUSD03Y. "While everyone else is losing money for the next few years, you can be getting a guaranteed, more or less, 5% return that's compounded."

He said he's watching to see if palladium - an investment he bought at the end of 2023 but sold in January - falls further. One way to play that commodity would be through the abrdn Physical Palladium Shares ETF PALL, he said.

The markets

Nasdaq-100 futures (NQ00) are pointing to a sharp drop, with S&P 500 futures (ES00) also lower, but the Dow (YM00) is set to buck the trend. Bonds are rallying BX:TMUBMUSD10Y BX:TMUBMUSD02Y, and gold (GC00) is higher.

 
Key asset performance                                                  Last       5d      1m      YTD     1y 
S&P 500                                                                7,718.94   -1.06%  2.21%   12.76%  15.71% 
Nasdaq Composite                                                       26,692.87  -3.07%  2.75%   14.85%  17.74% 
10-year Treasury                                                       5.084      -15.10  14.70   91.20   111.10 
Gold                                                                   4,177      0.97%   -2.92%  -3.58%  -1.13% 
Oil                                                                    94.83      6.62%   -7.05%  65.18%  61.41% 
Data: MarketWatch. Treasury yields' change expressed in basis points. 

The buzz

Amid a deluge of data, producer prices ran a hotter-than-forecast 1.3% and as retail sales also surpassed expectations, with a 0.8% gain. Weekly jobless claims

Anthropic told investors that quarterly revenue jumped 50% to $16.8 billion, but that represented a slower pace compared with the prior quarter.

Rocket Lab will delay the maiden launch of its Neutron rocket, and shares (RKLB) are sinking.

The AI selloff continued to batter South Korea's Kospi index KR:180721, which slid 8%, with memory-chip maker SK Hynix (KR:000660) slumping 11%.

FTC subpoenas OpenAI and Anthropic over consumer harms.

The chart

Bespoke Investment Group shared this chart on the X platform, showing the difference between first- and second-half performances this year so far based on the Russell 1000 index RUI. "The 100 best-performing stocks in the Russell 1000 in the first half are down an average of 15.6% in the second half. The 100 worst stocks in the first half are up 14.6% in the second half."

Top tickers

These were the most frequently searched ticker symbols on MarketWatch as of 6 a.m.:

 
Ticker symbol  Security name 
NVDA           Nvidia 
TSM            Taiwan Semiconductor Manufacturing 
GME            GameStop 
MU             Micron 
TSLA           Tesla 
SPCX           SpaceX 
AMD            Advanced Micro Devices 
AAPL           Apple 
AMZN           Amazon 
META           Meta 

-Barbara Kollmeyer

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(END) Dow Jones Newswires

10-15-26 0840ET