Wall Street: Marko Kolanovic was fired by JPMorgan for a mistake

For years, the financial media has called him “Gandalf” and “demigod” for his ability to predict market movements. But now Marko Kolanovic finds herself in the loneliest part of her life. Wall Streeton Wednesday JPMorgan Showed him the exit door.

The strong stock market rebound that began in early 2023 surprised many investors. But JPMorgan Chase chief strategist Kolanovic doubled down on his pessimistic outlook as other big bank analysts jumped on the idea and raised their forecasts. The stock market continued to rise, with the major indexes hitting new highs again this week.

Kolanovich predicted a recession that didn’t materialize and largely missed the artificial BroadCast Unitedligence boom that has boosted tech stocks over the past 18 months.

JPMorgan’s current research view is that the S&P 500 will reach 24% by the end of the year. In a final report last week, Kolanovic warned of a “clear disconnect” between stock valuations and the economy, shrinking liquidity and leadership teams masking weakness.

Marko Kolanovic

The danger of bears is everywhere

His departure highlights the dangers of taking a “short” stance, which is never a popular position in a rapidly rising market in an industry that sells investments to clients. If you tell clients that the market will fall when it is rising, your clients lose money, and you and your firm risk losing credibility.

Kolanovich was inducted into the Institutional Investor Hall of Fame in 2020 after serving as a top analyst for the publication for many years.

Kolanovic, 48, who is originally from Croatia, told Bloomberg News that he earned a degree in classical music before immigrating to the U.S. to study at New York University. He earned a doctorate in theoretical high-energy physics and began his career on Wall Street in the early 2000s, joining JPMorgan Chase after it acquired Bear Stearns during the 2008-09 financial crisis.

Kolanovic’s status as a derivatives strategist rose to prominence in 2015 when he made a series of highly accurate short-term forecasts on the direction of the S&P 500 based on expectations of how quantitative funds would react to growing volatility.

Leading Analyst for Many Years

Then, at the height of the Covid-19 market panic in March 2020, he made the bold and ultimately correct prediction that stocks would quickly rebound to new all-time highs. Kolanovich was inducted into Institutional Investor magazine’s Hall of Fame in 2020 after serving as its chief analyst for many years.

But over the past three years, the JPMorgan executive has made a series of ill-timed calls. He advised clients to increase their holdings of stocks during the market sell-off in 2022. Then he advised clients to reduce their holdings in early 2023 when stocks began to rebound sharply.

If the first rule of market forecasting is true, the second rule might be: Don’t be the only one who’s wrong. The 45% gain in the S&P 500 since the beginning of last year has surprised much of Wall Street, but naysayers have slowly come to terms with it.

Kolanovic, however, has a history of going against the grain. In a 2018 interview, he told Bloomberg: “I tend to be a bit of a contrarian and look at things that people don’t see right now… The bad thing is that sometimes you look too far ahead.” In economics, “too early” can sometimes also mean “wrong.”

When you are wrong, don’t insist

Kolanovich is not the first to fall into this trap. Bernstein’s predecessor, Merrill Lynch stock guru Charles Clough, left the firm at the peak of the dot-com bubble after predicting a bearish trend in stocks just as the rally accelerated in the late 1990s.

Morgan Stanley’s Mike Wilson, one of Wall Street’s most prominent pessimists, withdrew his bearish bet on the S&P 500 in May, leaving Kolanovic and JPMorgan as the only bear market forecasters.

Wilson may have paid a price for his attitude, too. Morgan Stanley announced his resignation as chairman of the bank’s global investment committee in an internal memo in February.

When the market is partying and making money, perhaps few people are willing to listen to the voices of skeptics.