Key Takeaways
- The stock market has been volatile so far this year, but one Morgan Stanley advisor is urging investors to stick it out.
- Stocks should get a lift from the combination of accelerating earnings growth and lower interest rates this year, according to Jim Lacamp.
Investors may be tempted, after three years of double digit gains, to ditch the stock market amid this year’s bout of volatility. Jim Lacamp, senior vice president with Morgan Stanley Wealth Management, is encouraging them to white knuckle it.
The stock market in early 2026 can feel “really hard to stick with, because of the rapid-fire news and the rapid-fire changes in policy,” said Lacamp during a CNBC appearance on Friday. “But I would caution people about getting out of this market.”
President Donald Trump’s efforts to take control of the Federal Reserve and Greenland have rattled stocks this year. The S&P 500 recovered most of its losses from earlier in the week, but still notched its third negative week in the last month.
Why This Is Important
President Trump’s tariff threats have repeatedly put investors on edge over the past year. Nonetheless, stocks have climbed to record highs amid the AI infrastructure boom and surprisingly resilient consumer spending.
Lacamp urges investors to look through the noise and focus on the bigger picture. It would be “really rare,” he said, for stocks to fall into a bear market while interest rates are declining and earnings are rising, as is expected this year.
Lacamp says the stock market’s improving breadth is another bullish sign for investors. For years, the Magnificent Seven accounted for the vast majority of the S&P 500’s return. They were “the only clean shirt in a really dirty laundry basket,” said Lacamp. “Now we’re seeing expansion everywhere. The biotechs are moving. The banks are moving. Natural resources are moving. Small caps are moving.”
This week’s Greenland saga presents another argument for sticking out the volatility: Trump tends to back off his threats once markets are in a tizzy. There’s even a term for it—the Taco trade—and it’s been a reliable strategy over the past year.
Granted, there are plenty of risks in this market. Or, as Lacamp puts it: “There are a lot of fat tails on this rodeo bull.”
Related Education
Last year’s One Big, Beautiful Bill Act and the Trump administration’s deregulation campaign are both expected to accelerate earnings growth this year. But they could be a double-edged sword for Trump, who Lacamp warns is walking “a really narrow path” on the economy.
The president wants to run the economy hot heading into the midterm elections in November, but that could keep inflation elevated and prevent the Federal Reserve from cutting rates as much as investors expect. Higher interest rates would be a double-whammy for the stock market, weighing on corporate earnings and depressing stock valuations.