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Wall Street Bids Adieu to Its Biggest Bear

JPMorgan’s Marko Kolanovic had a knack for making aggressive calls, but now the analyst is out after missing a roaring bull market

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Marko Kolanovic, JPMorgan’s top market strategist, called for a recession that hasn’t materialized. Photo: Bloomberg

Marko Kolanovic found himself in the loneliest place on Wall Street.

A robust stock-market rally that started early in 2023 caught many investors by surprise. But as other big-bank analysts relented one by one, adjusting their forecasts higher, Kolanovic, JPMorgan Chase’s JPM -0.07%decrease; red down pointing triangle top market strategist, doubled down on his bearish outlook. Stocks kept rallying, with major indexes hitting new highs again this week. 


On Wednesday, the man dubbed “Gandalf” and “Half-Man, Half-God” by the financial press over the years for his prowess at predicting market moves, was out of a job at JPMorgan.

Kolanovic called for a recession that hasn’t materialized, and largely missed the artificial-intelligence boom that has propelled technology stocks for the past 18 months. 

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JPMorgan’s current research view is that the S&P 500 will tank 24% by year-end. Kolanovic warned in one of his final reports, out last week, of a “clear disconnect” between stock valuations and the economy, diminishing liquidity, and narrow leadership that is masking weakness.

His departure highlights the perils of being a stock-market bear—never a popular position in an industry whose business is selling investments to its customers—during a roaring bull market. If you are telling clients that markets will fall and they rise instead, your clients lose money and you and your firm risk losing face.


 “It’s not really a matter of being right or wrong,” said Richard Bernstein, who was chief investment strategist at Merrill Lynch before starting his own investment firm in 2009. “It’s more that the product people think a bear hurts business and a natural conflict brews.”

Kolanovic, a 48-year-old native of Croatia, told Bloomberg News he earned a degree in classical music before coming to the U.S. to study at New York University. He got a Ph.D. in theoretical high-energy physics and started a Wall Street career in the early 2000s, joining JPMorgan when it acquired Bear Stearns in the midst of the 2008-09 financial crisis. 

Kolanovic rose through the ranks and attracted widespread attention as a derivatives strategist in 2015, when he made a series of highly accurate short-term calls on the direction of the S&P 500 based on how he expected quantitative funds to react to increasing volatility. 

Then, during the peak of Covid-19-related market panic in March 2020, he made a bold and ultimately correct call that stocks would quickly bounce back to record highs. Kolanovic was inducted into the Institutional Investor Hall of Fame in 2020 after numerous years as the publication’s top-ranked analyst. 


But over the past three years, the JPMorgan strategist made a series of untimely calls. He recommended clients take an overweight position in stocks during the market selloff of 2022. Then he advised them to cut exposure in early 2023, just as stocks began to rebound sharply. 

JPMorgan’s current research view is that the S&P 500 will decline 24% by the end of the year. Photo: Peter Morgan/Associated Press

“Marko was excellent when it came to understanding how the equity derivatives market can occasionally be the tail that wags the dog. He made some great calls,” said Andy Constan, chief executive of Damped Spring Advisors, a consulting firm for macro hedge funds. “Then he was promoted to macro, and he struggled in generalizing to broad markets. Why he made so many aggressive calls over the last few years is beyond me.”

If the first rule of forecasting markets is to be right, the second rule might be: Don’t be the only one who’s wrong. The S&P 500’s 45% rally since the start of last year caught most of Wall Street by surprise, but the naysayers slowly capitulated. 


Kolanovic has a history of going against the grain, however. In a 2018 interview, he told Bloomberg: “I do tend to be a more contrarian person who looks at things that people aren’t looking at right now…The bad is that you may be sometimes looking too far out. ‘Too early’ sometimes also means ‘wrong’ in finance.”

Kolanovic isn’t the first to fall into this trap. Charles Clough, a predecessor of Bernstein’s as Merrill Lynch stock guru, left the firm near the height of the dot-com bubble after turning bearish on stocks just as the late-1990s rally accelerated.

Morgan Stanley’s Mike Wilson, long one of Wall Street’s most prominent bears, dropped his bet against the S&P 500 in May, leaving Kolanovic and JPMorgan as an outlier. 

Wilson might have paid for his stance, too. Morgan Stanley sent an internal memo in February announcing that he was leaving his post as chair of the bank’s Global Investment Committee. 

When the market party is raging and there is money to be made, it might be that few want to hear from a doubter. 

“If you think about the current speculative environment when investors are max bullish, a subdued view might not jibe within a sell-side firm,” said Bernstein, the former analyst.

Write to Jack Pitcher at jack.pitcher@wsj.com


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Appeared in the July 5, 2024, print edition as 'Wall Street Says Bye To Its Biggest Bear'.