Investor Warns Nasdaq Could Fall 35% as Inflation and IPOs Drain Liquidity

Slavik Kolesnik, a senior investment manager and bond investor who co-manages the five-star Morningstar rated Leader Capital High Quality Income Fund, said Nasdaq could drop 35% this year. In comments to Business Insider, he argued that recent volatility in chip stocks is an early sign of a larger pullback ahead.

Kolesnik said a wave of giant IPOs expected this year will pull massive amounts of capital into new offerings, and that money will likely come from other stocks, especially the “Magnificent Seven,” which make up a large share of major indexes such as the Nasdaq. He pointed to last Friday’s SpaceX offering, which drew strong investor demand, and said future listings from Anthropic and OpenAI could intensify that drain. “This is capital that has to come from somewhere, and that somewhere is the Magnificent Seven,” he said.

He also expects inflation to keep rising. The Consumer Price Index climbed to 4.2% year over year in May, the highest level in three years. Core inflation has so far remained moderate, but Kolesnik said high energy prices will eventually feed through to prices across the economy. He added that when inflation rises, long-term bond yields tend to climb as investors price in a longer period of high interest rates, which is usually bad for growth stocks.

Kolesnik said his base case is that core personal consumption expenditures inflation will rise to around 4%, compared with 3.3% in April. He said his 35% downside target for Nasdaq would amount to a return to its 200-day moving average, which he described as a key technical level.