Markets can change direction in minutes, Regions Asset Management chief investment officer Alan McKnight warned, calling investor sentiment “incredibly fickle” during an appearance on The Claman Countdown. His message came as traders weighed shifting rate expectations, earnings surprises, and geopolitical risks. McKnight outlined where he sees opportunities and how investors can steady their approach.
Volatility has become the norm
Investors have faced sharp swings since the inflation surge of 2021–2022 and the rapid rate hikes that followed. Stocks rallied on soft inflation prints and retreated on stronger labor data. Bond yields soared, then retreated as growth hopes shifted. That pattern has repeated, often within a single week.
McKnight’s description of sentiment reflects this churn. Short news cycles and algorithmic trading amplify reactions. Investors often move from risk-on to risk-off in a single session. The result is whiplash that tests discipline.
“The market is incredibly fickle.”
Where he sees opportunity
Without chasing the hottest themes, McKnight emphasized selectivity and balance. He pointed toward companies with steady cash flows, healthy balance sheets, and the ability to fund growth internally. That approach has appeal when borrowing costs are higher than investors were used to in the last decade.
He also discussed areas where earnings visibility remains clearer. Firms with recurring revenue, essential services, or pricing power can better navigate swings in demand. Dividend growers drew attention for their history of rewarding shareholders while keeping discipline on capital use.
A focus on quality and time horizon
Volatility can punish investors who trade headlines. McKnight’s framework leans on fundamentals that outlast a single quarter. That includes free cash flow coverage for dividends, balance sheet strength, and returns on invested capital that exceed funding costs.
He suggested patience over prediction. Rather than time each swing, allocate across assets and rebalance with rules. That approach supports consistency even when markets send mixed signals.
- Favor quality balance sheets and durable cash flow.
- Use diversification across stocks, bonds, and cash.
- Rebalance on a schedule, not on emotion.
- Prioritize dividend growth over the highest yield.
Bonds, cash, and the new math of income
Higher yields have changed the role of bonds and cash. Investors can now earn meaningful income without taking equity-like risk. That shifts the asset mix case, especially for retirees and conservative savers.
Quality intermediate bonds cushion a portfolio when growth slows. Short-term Treasurys can serve as dry powder for future equity dips. McKnight’s comments suggest a renewed respect for fixed income after years when yields were thin.
Risks that can turn the tide
Markets remain sensitive to inflation surprises and policy signals. A hotter inflation reading can hit both stocks and long-duration bonds. Slowing earnings could pressure high-valuation names. Geopolitical flare-ups can jolt energy and shipping costs.
On the other hand, easing price pressures and steady jobs data can extend a soft-landing story. That backdrop supports companies with stable demand and cost control.
What investors can control
McKnight’s core point is about behavior. Investors cannot control the news cycle. They can control process. Clear rules for allocation and risk can prevent expensive mistakes during sudden swings.
He also pointed to the value of liquidity. Keeping a cash cushion reduces the pressure to sell into weakness. It also allows buying when prices fall to attractive levels.
How this guidance fits the bigger picture
History shows that stretches of choppy trading often precede stronger long-term returns for patient investors. The discipline to hold quality and add on weakness has paid off through cycles. That does not mean ignoring risk. It means sizing positions and diversifying so downturns do not derail plans.
For many households, the past few years reset expectations for both risk and income. With yields higher, balanced portfolios look more resilient than they did when rates were near zero. That supports the case for measured, rules-based investing.
McKnight’s warning about a fickle market is a call for discipline, not retreat. The practical steps are clear: favor quality, keep cash flow front and center, and use rebalancing rules. The next few months will likely bring more sharp moves. Investors who anchor to process, not headlines, may find those swings present chances rather than threats.
