Excess Returns · Saturday, July 11, 2026
Jim Paulsen anticipates a market correction of 10-20% in the coming months, viewing the recent AI surge as potentially frothy and reminiscent of the dot-com bubble. He believes tech stocks will be most vulnerable, potentially dropping over 20%, while other sectors may see modest gains.
“I think that thing got frothy and, um, and ever since then it's been a little, uh, you know, sucking up all the financial market information in the room and it's all about AI and, um, it feels a little more like.com to me and there's several things that have creeped up on indicators I watch.”
“So I, I, you know, kind of weaken into June or so. So I've kind of gone on record of saying I think there's going to be a correction here in the next several months. I think we might end the year about where we have, you know, ended at its highs or maybe we won't make that up until early next year. But I, I, my guess is, is we're going to have a correction, you know, somewhere between 10 and 20% that'll feel ugly, um, scare people.”
“And the composition of that if I had to guess, I'd say, you know, the tech stocks or near era stocks, they go down more than 20%. But a lot of the rest doesn't go down near as much, maybe it climbs 10% on average.”