$90+ barrel oil and a 10-year Treasury yield near 5% are raising anxieties on Wall Street. But while some investors may think waiting on the sidelines is the safest strategy, Kevin Mahn, president and chief investment officer of Hennion & Walsh Asset Management, argues that doing so will cause you to miss out on the market’s biggest rebounds. His firm reviewed 20 years of market data and found that missing the market’s 10 best days cut returns in half, while missing the 30 best days cut returns by 84%.
So instead of waiting—and worrying-—Mahn’s practical advice is to stay invested at a level consistent with your risk tolerance, keep some cash on hand for attractive opportunities, and make new allocations according to your investment goals: growth, income, or a blend of both. That way, you can put away your crystal ball and save yourself the headaches from trying to time the market.
Here’s how Mahn applies his strategy to stocks and bonds in light of the market’s current risks.
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Why market timing will cost you
Buying a stock after shares have fallen is a great idea if an investor has done their homework and believes its new price better reflects the business. Mahn does not reject buying a dip. But he doesn’t believe in market timing, either.
The reason is that the market’s strongest daily gains often take place near its worst daily losses. Mahn said Hennion & Walsh Asset Management’s 20-year review found that seven of the market’s 10 best days occurred within two weeks of the 10 worst days. So, an investor who exits after a frightening selloff may completely miss out on the recovery.
And that’s an expensive mistake to make.
If you’re not in the market on those other seven days, you’re likely to miss out on the most significant returns the market has to offer.
Kevin Mahn, when asked what is wrong with waiting to buy a market dip
Sure, Mahn acknowledges that sitting on cash feels safer in the aftermath of a “bad” market day, but there’s much more at stake than simply avoiding further losses, because it’s impossible to time the rebound.
Therefore, Mahn suggests investors should stay invested according to their allocation plans, but they should also retain some cash, or dry powder, for opportunities that emerge when a company or sector pulls back.
How to use cash without turning it into a market-timing bet
Long-term, buy-and-hold investors should evaluate their portfolios to see if their current allocation matches their need for growth, income-—and tolerance for losses. This could help shift the focus from “Will the market decline next week?” to “What job does this money need to do?”
For instance, an investor seeking growth may choose stocks, while an income-oriented investor may favor bonds. For someone seeking the best of both worlds, income and growth, Mahn highlights bonds—particularly municipal bonds (more on that below). Overall, he recommends overweighting stocks while also keeping bonds in your portfolio.
Mahn’s caution against timing does not mean that price is irrelevant, either. In his view, buying a dip works best when an investor finds an opportunity at a more realistic price. But there’s a big difference between evaluating a particular security after its price falls and trying to predict the exact day when the entire market will bottom.
Municipal bonds = income + price opportunity
Mahn’s case for municipal bonds rests on a historical pattern his firm discovered. He said that, over the past 25 years, the 20-year municipal bond index reached or exceeded a 5% yield in only 6% of months.
According to Mahn, in the instances where that municipal-bond yield reached the 5% level, yields were lower by an average of 80 basis points one year later. Bond yields generally move in the opposite direction of bond prices, and so, if yields decline after an investor buys a bond, the bond’s market price generally will rise and the investor will also get the bond’s coupon income, or its scheduled interest payments.
If you were to buy those munis bonds today, at a yield of 5% and yields come in 80 basis points lower, by average, a year later, well then you’re going to get a nice price appreciation plus the coupon income all along the way.
Kevin Mahn, when asked where he sees opportunities within the bond market
Of course, Mahn adds, this scenario is based on his firm’s historical analysis, and not a guarantee that yields will decline over the next year. After all, interest rates can rise, and if they do, then bond prices will fall.
Municipal bonds also carry issuer and credit risks, even though they are often used by investors seeking tax-exempt income, so Mahn wants investors to consider the specific fund or bond, its duration, credit quality, tax treatment, as well as how well the holding fits within the rest of their portfolio.
In addition, Mahn believes the 10-year Treasury is a buying opportunity because expectations point to lower yields by the end of the year, but these expectations could change depending on how inflation, growth, or Federal Reserve policy develops.
A few red flags
Mahn expects multiple pullbacks before the U.S. midterm elections, with market declines as steep as 1% to 5%. He treats these pullbacks as selective deployment opportunities for sidelined money.
His larger concern, however, is a more severe escalation in tensions between the United States and Iran that keeps oil prices above $110 to $120 a barrel for a sustained period. Mahn believes this would worsen inflationary pressures and lead markets to anticipate more interest-rate increases than they currently expect. In that scenario, he says a more serious market decline could move into correction territory of 10% or more.
But Mahn emphasizes that this is not his “base case.” And that distinction matters to investors considering whether to change their portfolios. A risk worth monitoring is not automatically a reason to abandon their allocation plans, especially when the cost of leaving the market can include missing fast recovery days.
His skepticism also extends to the Federal Reserve’s most recent 25-basis-point rate increase. Mahn calls it a “potential mistake” because, in his view, a rate increase cannot reopen the Strait of Hormuz or directly lower oil prices. He notes that the Federal Reserve’s forecast for core PCE, its preferred inflation gauge, points to inflation moderating to 2.5% in 2027. Mahn suggests that lower oil prices and easing inflation after the U.S. midterm elections could even result in a future rate cut, though he acknowledges that markets are not pricing in that outcome.
How to separate long-term trends from ‘hot trades’
For investors adding stock exposure, Mahn focuses on areas where he sees planned spending rather than where shares have risen most recently. He cites AI infrastructure, power, water, aerospace and defense, and health care innovation. His argument is that a large spending cycle can create opportunities before every beneficiary becomes the market’s most popular trade.
In aerospace and defense, Mahn says planned global spending to upgrade military capabilities helped send some stocks higher and lifted valuations. And while those shares later cooled, even though much of the planned spending had yet to occur, that combination, for Mahn, made their pullback all the more appealing.
Within the AI ecosystem, Mahn favors receivers of investment dollars over spenders. He describes NVIDIA NVDA as both because of its data-center business, chip sales, partnerships, and funding activity. He also points to Taiwan Semiconductor Manufacturing Company TSM and Micron Technology MU as companies connected to demand for semiconductors and memory.
Mahn’s broader AI case includes cybersecurity. He calls cybersecurity “the glue that holds the technology puzzle together,” as artificial intelligence can be used for harmful cyber activity as well as defensive tools. He names CrowdStrike CRWD as his leading cybersecurity choice and Fortinet FTNT as another company he views favorably.
Even utilities are an AI-related investment
Utilities are often treated as defensive income investments, particularly during volatile markets, but Mahn argues that the sector has another potential role: providing the reliable power that data centers require. He describes utilities as a “backdoor way” to participate in the AI revolution because data centers need electricity from sources like natural gas, nuclear power, and traditional generation.
Mahn highlights Duke Energy DUK and American Electric Power AEP. Duke Energy operates nuclear plants, and Mahn cites nuclear power as 19% of United States’ electricity production. Utilities have performed well during the past two years before idling in 2026, something he views as an opportunity.
The trade-off, though, is that utility stocks are sensitive to interest rates, regulation, capital costs, and new project execution. So, investors attracted by the AI connection still need to examine the utility’s balance sheet, geographic footprint, generation mix, dividend policy, and valuation. After all, even a data-center demand story does not erase the traditional risks of owning a regulated utility.
The takeaway for long-term, buy-and-hold investors
Mahn’s central message is less about predicting the market’s next move than it is about avoiding market timing. Long-term, buy-and-hold investors can begin with their goal: stocks may fit a growth objective, bonds may fit an income objective, and municipal bonds may fit an objective that combines both. The best choice for an investor depends on their own risk tolerance, tax situation, time horizon, and existing holdings.
From there, investors can decide how much cash they need for near-term spending and how much they want available for selective additions during pullbacks. Cash can provide flexibility, but Mahn’s 20-year market analysis is a reminder that holding too much of it while waiting for an obvious all-clear comes with a real opportunity cost.
After all, it’s not about timing in the market but rather time in the market.
Mahn’s views reflect his own market outlook and investment approach. Investors should consider their financial circumstances and, where appropriate, consult a qualified financial professional before making investment decisions.