Rudi's View | 10:00 AM
It's a very popular contest; calling the end of AI and the equities' bull market, but should investors be truly worried?
By Rudi Filapek-Vandyck, Editor
My single piece of advice to investors this month is to not let yourselves be led astray by the sudden outbreak of volatility that has also reinvigorated the doom-and-gloomers on social media and elsewhere.
There is a lot of biased wishful thinking among bubble spotters on steroids who have been repeating the same warnings over and over for years now, but the bulk of their "research" and "analysis" amounts to what Germans call Hineininterpretieren.
In this context, it means deciding on your conclusion first and then interpreting all observations and events to convince everyone that your predetermined conclusion is the one and only correct one.
If you have been shouting "bubble" and "crash" for more than three years, every single market stumble can only ever be the first signal of the worst-case scenario waiting to unfold.
The big challenge in financial markets is that falling prices are such a formidable force that even the most experienced and ice-cold stoics among investors risk eventually becoming overwhelmed by conflicting emotions.
Let's start with the good news: outside particular areas of stress among highly indebted, more speculative businesses in today's AI infrastructure universe, there is little evidence of comparable stress across the broader financial system.
This suggests equity markets are experiencing a largely internal stress episode.
Is this because of "bubble"-like valuations? Unlikely. Every technology bull worth their salt can point out that today's valuations in the US are nowhere near the levels seen during the late 1990s; average multiples today are lower than last year and the year before.
Even if current growth projections turn out to be too bullish, one must adopt truly apocalyptic assumptions to classify today's share prices as bubble valuations.
Of course, another global economic recession or financial system crisis akin to the GFC can never be ruled out entirely, but does that make such a scenario plausible for next year?
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