T-bill and chill: Robinhood CIO on what to do after the selloff and the danger markets are ignoring

Stephanie Guild, CIO of Robinhood, advises investors to remain patient amid market selloffs, suggesting a shift from tech to T-bills and healthcare. She expresses concern over crowded trades in AI and Nvidia, and highlights potential in undervalued Chinese tech stocks, industrials, and defense sectors. Guild also warns about the opaque private credit market, echoing concerns from DoubleLine's CEO. She emphasizes the importance of discerning stock-picking and notes the savvy nature of everyday investors in navigating market dips and peaks.

By Barbara Kollmeyer Everyday investors are not panicking yet, says Stephanie Guild Robinhood's Stephanie Guild has been trimming tech in portfolios since September and says sitting tight may be the best move investors can make right now. An optimistic setup is starting to take hold for Wednesday, though the pressure is on for Nvidia earnings to put a pin in the recent selloff for stocks. Has the retail crowd been keeping its cool lately? Stephanie Guild, chief investment officer for Robinhood Markets (HOOD), which boasts 27.1 million users on its platform, says she hasn't seen too much panic lately or margin calls popping off. Guild's many hats include helping manage $1 billion for 180,000 "everyday investors" as she calls them, looking after Robinhood Strategies long-term wealth management for clients, and penning a weekly blog. She calls the recent market pullback "healthy," but would have preferred to see that in late September/early October. "I am a little bit nervous about the crowded nature of certain names, things like Nvidia and just the AI trade overall, and if we can get a correction there, I think it can actually be a healthier bull market in that space," said Guild, whose investment banking experience includes 21 years at JPMorgan. "But if there's a Band-Aid put on it in the short term or we get distracted by something so-called 'good,' it worries me for how bad it could be in the future. I think we have to have some reckonings in between, smaller ones that aren't systematically catastrophic," she said. Her tech concerns moved her to reduce that exposure for portfolios in October, adding healthcare, among other moves. "We were nervous and had a little higher T-bill allocation from September, and we increased it more last week," she said. Historically, the stock market has often shot off two or three warnings before a big correction, like a one-day selloff followed by a big rebound, says Guild. Friday's action felt like the third warning, so they again took profit on tech names and put that into T-bills. Investors may be hitting a wall. "I was talking to my team and I'm like, 'What should we invest in.' And no one could come up with a high conviction thing because we already own healthcare," she said. The message to her is that if there isn't anything good out there to buy, investors should just sit tight and be patient- such as bide time in T-bills. Guild is eyeing "promising plays," such as Chinese tech stocks that are currently undervalued and will challenge the U.S. tech industry. "The longer you starve them [China] for chips and stuff, they're just going to come up with their own solutions." Also, she likes industrials and defense companies that she sees benefiting from incentivized capex spending because of the One Big Beautiful Bill. As for U.S. tech, it's not black and white. "I think we're also secularly in a stock-pickers market where you don't just buy that [Magnificent] Seven," but be more discerning about one company versus another. They have a "decent" allocation in Alphabet (GOOGL), because they feel it has so much going for it, and got more positive on Apple (AAPL) in September because it has enough money to figure out how to innovate. Guild sees Gap (GAP) as a good retail shelter if consumers tighten belts. Guild says those everyday investors, are more savvy than given credit for, buying when those stocks dip and trimming when they climb, and not dumping entire positions. "I think they're really value investors," she says. "They look for companies that have been through it and like to invest in them." Those investors are betting on stocks where they see a "really bright future that is underappreciated," and can see long-term paths, such as Opendoor Technologies (OPEN). Guild, whose decades in markets mean she was present during major crises, worries markets might not be paying enough attention to a troubling corner of the market right now. "The private credit market really does make me nervous," said Guild, echoing concerns heard earlier this week by DoubleLine's CEO Jeffery Gunlach. "The thing is it's so opaque, that we don't know how it's going to show up." Among her concerns are the lack of visibility on which financial institutions will be caught up, as well as how companies' ability to borrow may be affected. "I was just sitting in my seat at J.P. Morgan Private Bank when we first started showing people these private-credit funds. It made so much sense in the beginning because rates were zero and people were looking for yield. And this was a way to get equity-like returns without taking the same amount of risk or it felt like it at the time." The markets U.S. stock futures (ES00) (YM00) (NQ00) are inching up after four straight losses for the S&P 500 SPX and Dow industrials DJIA. Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD30Y are inching up, and bitcoin (BTCUSD) is hovering above $90,000. The buzz Analysts are expecting strong results from Nvidia (NVDA) due after the close. Target (TGT) stock fell slightly after the discount retailer cut its profit outlook. Lowe's shares (LOW) climbed 5% after the home-improvement retailer's better-than-forecast results, a day after a Home Depot (HD) warning. The Philly Fed manufacturing survey is due at 8:30 a.m., alongside the August U.S. trade deficit. Fed Reserve governor Stephan Miran speaks at 10 a.m. and the minutes of the Fed's October meeting are due at 2 p.m. Best of the web DJT stock has cratered, wiping out more than $5 billion in Trump family wealth. The 'Rolls-Royce of Turkey' is coming to America. Three years from GPT-3 to Gemini 3 The chart This Goldman Sachs chart shows how the investor debate surrounding how much AI capex spending will pay off is driving differentiation between company returns. Those with elevated leverage such as Oracle (ORCL) and CoreWeave (CRWV), and Meta (META), whose operating earnings growth is seeing pressure, are getting shunned. "The average stock price correlation across the large public AI hyperscalers has declined from 80% in June to just 20% today," says a team of equity strategists led by Ryan Hammond. Top tickers These were the top-searched stock-market tickers on MarketWatch as of 6 a.m. Eastern: Random reads 110-million year old puke reveals never-before-seen dinosaur. Aussie prisoner sues for his Vegemite sandwich. The first smooch was roughly 21 million years ago. -Barbara Kollmeyer This content was created by MarketWatch, which is operated by Dow Jones & Co. 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