I joined Paul Turton today on ABC Newcastle to discuss why the market is demonstrating new highs despite the fear and uncertainty surrounding geopolitical events, the rising risk of stagflation, and the growing threat to the U.S. Federal Reserve’s independence.

It appears the persistent rise in the S&P 500 is reflective of the collective excitement and optimism surrounding artificial intelligence (AI). According to sources like Gartner and Deloitte, it is expected that AI global spend will hit the US$1.5 trillion mark in the near future.

But we have seen this before. New technology, when it has the power to influence the course of humanity (think the introduction of automobiles, the internet), tends to benefit the consumer more than the investor. The issue arises when investors believe that ‘everyone will be a winner’, ultimately driving the cost of stocks up higher than the revenue they are generating. Remember, the higher the price you pay, the lower the return you get.

Investors might find benefit in diversifying their portfolios to include other assets like private credit to mitigate their exposure to public market volatility.

Tune into the episode from 39:20: ABC Newcastle Mornings