Many market commentaries have covered the concentration of equity market returns in a very small number of stocks. A recent paper by Arizona State University Professor Hendrik Bessembinder looks at 100 years of U.S. stock returns and his data shows that the narrowness of equity market wealth creation may be even more concentrated than is […]
I have often looked at that picture behind the President without being able to tell whether it was rising or setting. But now at length I have the happiness to know that it is a rising and not a setting sun – Ben Franklin from the Constitutional Convention (Philadelphia 1787). Since its founding, people have […]
Almost all investors are aware of the returns and valuations of their assets, but rarely, with the notable exception of pension funds, do investors consider the valuations of their liabilities.Large AI-hyperscaler bond issuance, growing geopolitical risks, and mounting government debt burdens are pushing real interest rates higher. At the same time, risk asset markets remain […]
The three largest initial public offerings (IPOs) in history could occur in 2026. SpaceX is targeting a June listing of $75 billion in stock at a $2 trillion valuation. OpenAI and Anthropic could also have IPOs later in 2026 with estimated valuations of $1 trillion each. Due to their enormous size, these three companies would […]
Innovation is advancing at remarkable speed, often in hard-to-see places. Quantum computing is one of those areas. Today’s classical computers calculate in bits, which can only have values of either 0 or 1. Quantum computers calculate in qubits, which can exist as 0, 1, or as a combination of both states simultaneously. Theoretically, quantum computers […]
In a bull market, stocks charge ahead. In a bear market, they hibernate. Over the last few months, neither of these animal analogies fit the equity market well. The animal that best describes today’s stock market is a duck. On the surface, it appears to glide across the pond with calm stability, but beneath the […]
If the disinflationary effects of demographics and AI-driven productivity gains offset the inflationary effects of persistent government deficits and debt monetization, the long-run inflation outlook may be more balanced than the current consensus expects. Birth rates in rich countries have been falling for decades and recently have taken another leg down. All major economies, including […]
The performance of markets in 2026 is likely to hinge on a few key themes or events, one of which will surely relate to AI, automation, and bubbles. Even though U.S. large-cap valuation metrics are at or near their highest historical observations, the U.S equity market is not necessarily in a bubble if new technology […]
Dispersion measures how much the performance of individual stocks diverges from each other. The equity market goes through periods of high dispersion, when the composition of the equity portfolio has a meaningful impact on performance, and low-dispersion periods, when the equity composition matters much less. The AI theme, which has driven up the stock prices […]
In 1978, prominent sociologist Mark Granovetter developed a threshold model to explain collective behavior, which may be pertinent to the current euphoria in parts of the equity market. According to his theory, every person has a “threshold,” defined as the number or proportion of peers who they must see act before that person will join […]