Power Lunch

Monday - Friday, 2:00 - 3:00 PM ET
Power Lunch

J.P. Morgan's $1 trillion man

Richard Madigan, CIO, J.P. Morgan Private Bank
Adam Jeffery | CNBC

U.S. stocks traded sharply lower on Monday as global growth concerns weighed on investors.

The Dow Jones industrial average fell nearly 400 points in afternoon trade, led by Goldman Sachs and Home Depot. The S&P 500 dropped 2.7 percent while the Nasdaq touched its lowest level since June of 2014.

"Earnings are miserable and continue to drive the market sell-off," one of Wall Street's top strategist told CNBC's "Power Lunch" on Monday.

"The operative phrase for fourth quarter earnings seems to be 'better than feared'. That doesn't translate well for hibernating animal spirits, but it is rousing a few bears," said Richard Madigan, chief investment officer at J.P. Morgan Private Bank, with $1 trillion in client assets under management.

"Greed right now is sidelined. We are back to levels where most individual investors have rebuilt investment portfolios to pre-crisis levels. The cash they have sidelined is money waiting to go back into core bonds, not add to equity positions."

$1 trillion of advice

Madigan is currently overweight equity positions, but holds considerably less than last year, Other asset classes were eliminated entirely, including commodities and emerging markets.

"We are completely out," said Madigan. "I don't know another time when I haven't owned some position in emerging markets, whether equity, debt or local currency."

Madigan also said long-term investors will ultimately be dealt the winning hand over short-term investors.

"The challenge will be patience, as without earnings growth, markets will eventually go after multiples more assertively," said Madigan. "Long-term money understands why it should stay invested and does, while short term money gets whipsawed by momentum, without really being able to make a lot of money for the effort."

"This week marks the start to the year of the fire monkey in the Chinese zodiac calendar," said Madigan. "It's a time where people are told to be vigilant and keep emotions in check, to think before acting. Emotive voters and investors this year are going to provide a volatile backdrop for markets."

CNBC's Jennet Chin contributed to this article