Steve Eisman, famed for The Big Short, warns investors not to chase stocks amid rising tariff risks and market complacency. He shares insights on AI, Nvidia, the bond market, and why he’s trimming exposure while staying long-only.
Steve Eisman Says: Don’t Chase Stocks Right Now
Steve Eisman, the investor famously portrayed in The Big Short, is urging caution in today’s market. The former senior portfolio manager at Neuberger Berman and host of The Real Eisman Playbook podcast remains invested, but has reduced exposure and is avoiding aggressive risk-taking for now. His message to investors is clear: this is not the time to chase stocks.
Tariffs Are the Primary Risk
Eisman pointed to tariffs as the single most significant risk facing the market. While much of the investment community appears complacent, he warned that trade negotiations—especially with Europe—are far more complex than they seem. In the European Union, each country has veto power on issues it considers critical, making consensus and progress difficult to achieve.
As for China, Eisman admitted the uncertainty is even greater, with too many moving variables to accurately predict outcomes. Due to these risks, he has scaled back exposure across much of his portfolio and is currently adopting a wait-and-watch approach.
Skeptical on Deficit Alarmism
On the subject of U.S. fiscal policy, Eisman dismissed renewed concern over the national deficit. He argued that while deficit worries tend to resurface every few years, they are often more about optics than substance. Referencing past commentary from leaders like Jamie Dimon and Pete Peterson, Eisman described deficit discourse as a form of financial “virtue signaling,” with limited impact on actual investment strategy.
He noted that despite all the debate, the 10-year Treasury yield remains stable around 4.5%, suggesting that the bond market is not signaling imminent danger.
Bullish on AI but Aware of Short-Term Risks
Despite pulling back slightly, Eisman retains long-term conviction in key growth sectors, particularly artificial intelligence. He praised Nvidia’s performance and leadership, citing the company’s 69% revenue growth and $3 trillion valuation as signs of a powerful technological trend.
Eisman believes the AI revolution is still in its early stages, but cautioned that a major trade war could overshadow short-term progress—even in high-growth sectors like AI.
Views on the Bond Market and Deficit Concerns
Addressing recent developments in the bond market, Eisman reiterated a longstanding view: the deficit matters only when it matters. He observed that high-profile financial leaders periodically raise alarms over fiscal deficits, referencing Jamie Dimon as a notable example. Eisman, however, expressed skepticism toward such warnings, likening deficit-related commentary to virtue signaling within the financial community.
He described the deficit debate as cyclical and rhetorical, suggesting that market participants often position themselves as fiscally responsible without offering actionable insights. Eisman recalled discussions from the 1990s, including meetings with former U.S. Secretary of Commerce Pete Peterson, where similar deficit fears were discussed at length without producing material consequences.
Despite recent volatility, Eisman pointed out that the 10-year U.S. Treasury yield remains at a manageable level of approximately 4.5%, indicating that current conditions do not warrant excessive concern.
No Interest in Gold
Eisman also commented on the recent movements in gold and copper, though he made clear that he does not follow gold closely and does not view it as a central indicator in his investment strategy.
Steve Eisman’s current strategy reflects caution in the face of geopolitical and trade-related uncertainties. He continues to invest in long-term themes like AI, but is pulling back on overall risk and warns against chasing momentum in a potentially unstable environment. His message to investors is straightforward: stay grounded, stay informed, and don’t get swept up in market euphoria.