Crossmark’s chief investment officer Bob Doll has characterized the current stock market environment as a “high-risk bull market,” warning investors that while upward momentum continues, conditions are increasingly favorable for a significant pullback. The former BlackRock chief US equity strategist told Business Insider on Thursday that elevated valuations and heightened speculation are creating potent downside risks despite the market’s ongoing upward trajectory.
Doll explained that while the bull market designation means the path of least resistance remains higher, two major catalysts could trigger a notable decline. According to the investment strategist, disappointing earnings reports or a more hawkish Federal Reserve stance in response to persistent inflation could quickly reverse market sentiment.
Market Vulnerabilities and Recent Warning Signs
The high-risk bull market faces immediate threats from both corporate performance and monetary policy shifts. Doll referenced the sharp 20% decline that occurred approximately a year ago over six to seven weeks as evidence of how quickly sentiment can deteriorate under similar conditions.
Thursday’s trading session provided a concrete example of earnings-related vulnerability when Microsoft shares plunged 12% after investors expressed dissatisfaction with the company’s results amid substantial AI infrastructure investments. This reaction demonstrated how quickly the market can punish even major technology companies when expectations aren’t met in the current environment.
Meanwhile, inflation concerns continue to loom over market stability. Doll expressed particular worry that inflation could round to 3% instead of 2% this year, noting that the market appears to be pricing in declining inflation rates.
Investment Strategy for Navigating Current Risks
To protect against downside risks in this high-risk bull market, Doll emphasized focusing on companies with strong free cash flow and high return on equity metrics. He explained that owning efficient companies generating robust profits provides a buffer against market volatility.
According to Doll, combining above-average return on equity with below-average price-to-free-cash-flow valuations creates a formula for success in the current uncertain environment. The financials sector emerged as his top choice for finding stocks meeting these criteria.
Additionally, Doll highlighted four major banking stocks as prime examples: Bank of America, JPMorgan, Wells Fargo, and Citigroup. He noted that these large banks possess the strongest balance sheets in the financial sector and typically trade at cheaper valuations compared to other financial industry segments.
However, performance has been mixed for these picks, with all four stocks showing negative returns so far in 2026. In contrast, Citigroup has substantially outperformed its peers over the past year with a 42% return, while the State Street Financial Select Sector SPDR ETF gained just 4%, underperforming the broader S&P 500.
Beyond Financials: Healthcare Opportunities
Outside the financial sector, Doll identified Gilead Sciences as an attractive opportunity based on its strong cash generation. The biopharma company boasts $1 billion in free cash flow, according to the strategist, making it another example of the quality metrics he seeks.
The stock has demonstrated strong performance with a 14% gain in 2026 and a 46% increase over the past year. This outperformance relative to many financial sector picks illustrates opportunities beyond traditional defensive sectors.
Investors will continue monitoring inflation data and corporate earnings reports in coming weeks to gauge whether Doll’s concerns about market vulnerabilities materialize into broader sell-offs or whether the bull market momentum can be sustained despite elevated risk levels.
