Market commentary

In my latest Firstlinks article, I explore whether artificial intelligence (AI) is following the familiar path of past technology bubbles. As businesses shift from AI experimentation to demanding measurable returns, the question becomes whether the trillions spent on AI infrastructure will ultimately generate enough revenue to justify today’s lofty valuations.

You can read the article via Firstlinks here: Have AI’s four horseman arrived? continue…

by Roger Montgomery Posted in Economics, In the Press, Insightful Insights, Market commentary, Technology & Telecommunications.

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Proposed changes to negative gearing, capital gains tax (CGT) and new Australian Taxation Office (ATO) rules for holiday homes could significantly alter the economics of property investing in Australia. By reducing the tax advantages associated with property ownership, the changes may weaken demand across several investor groups and influence property prices over time.

Drawing on supply and demand principles, this whitepaper paper examines how investors, rentvesters, property flippers, holiday homeowners and discretionary trusts could be affected. It also explores the potential impact on borrowing capacity, resale demand and the attractiveness of established residential property compared with new builds. continue…

by Roger Montgomery Posted in Aura Group, Economics, Editor's Pick, Market commentary, Popular, Property, Whitepapers.

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“You cannot be afraid of new technologies. I think that this tenet passed Warren Buffett by. As he is the greatest investor of all time, I think it’s important to recognise that if he were not afraid of product cycles and obsolescence, he would have made much more these last few years than he did. Now, I know we shouldn’t criticise someone of his unbelievable prowess, but we must also recognise that it was wrong not to include technology stocks in the portfolio…[they] are creating too much wealth to ignore.”

With Musk now the world’s first recorded trillionaire after SpaceX’s float last Friday, you might be thinking the above quote has merit, especially as 60 per cent of Berkshire Hathaway’s portfolio is sitting in cash. 

But the above quote, by Jim Cramer, was made in January 2000, just three months before the Dot.Com crash wiped 76.81 per cent from the tech-heavy NASDAQ Composite index and investors saw an estimated US$5 trillion in paper wealth evaporate between 2000 and 2002. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Market commentary, Technology & Telecommunications.

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I joined Kirsten Aiken on ABC The Business to discuss the challenges facing Australia’s retail sector. With higher interest rates slowing the economy and uncertainty around proposed tax changes weighing on consumer confidence, spending has softened across age groups. We explored the pressures facing traditional retailers, the accelerating shift to online shopping, the impact of global competitors, and why department stores such as Myer and David Jones continue to face long-term challenges as consumer habits evolve.

Watch here: Challenges grow for the retail sector, Glue the latest to close. continue…

by Roger Montgomery Posted in Companies, Consumer discretionary, Economics, Editor's Pick, Insightful Insights, Market commentary.

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SpaceX has some real businesses, but if I am completely lucid, I’d say there’s no business that would support its US$2 trillion valuation.

While the headlines are made by rockets and SpaceX’s reusable Falcon 9, which has radically changed the economics of sending cargo into orbit, slashing launch costs by 85 per cent to roughly US$2,700 per kilogram, it is Starlink that generated US$11 billion of last year’s US$18 billion in revenue. 

In fact, sending rockets into space doesn’t do a lot for the company’s finances. Indeed, SpaceX generates more revenue from renting out its NVIDIA chips to Anthropic than it does from rockets. continue…

by Roger Montgomery Posted in Companies, Market commentary, Market Valuation, Technology & Telecommunications.

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With stock markets recently retreating marginally from artificial intelligence (AI)-fuelled record highs, the question many thoughtful investors are asking is: Will the bull run resume, or is this the beginning of a broader correction?

Of course, we can’t be certain but what we can know is that as stock prices continue to soar, fears of an AI bubble will likewise increase.

Financial markets have performed spectacularly since late 2022, and equities have accelerated their gains this year just as structural stresses begin to appear and debates about sustainability begin to intensify. continue…

by Roger Montgomery Posted in Economics, Market commentary, Technology & Telecommunications.

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For the last three years, the corporate world’s relationship with artificial intelligence (AI) has been a lot like a toddler taking its first steps, or maybe a baby monkey trying to work out what to do with a camera.

Initially, there was The Era of Scaling and Praying (2022–2025), a typical phase after the invention of nearly every General Purpose Technology (GPT) since the railroad. During this period, tech giants invested hundreds of billions in infrastructure, creating huge engines even before knowing if their products would be useful or how they’d be operated. continue…

by Roger Montgomery Posted in Market commentary, Technology & Telecommunications.

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I joined ABC Weekend Breakfast to discuss the record-breaking SpaceX Initial Public Offering (IPO), which briefly pushed Elon Musk’s wealth beyond US$1 trillion and valued the company at more than US$2 trillion. We explored what drove the strong debut, why much of SpaceX’s revenue now comes from its AI and data centre businesses rather than its space operations, and how NASDAQ’s decision to fast-track the stock into its index could force ETFs and index funds to buy shares. We also discussed the potential impact of insider selling in the months ahead and what the IPO could mean for everyday investors. continue…

by Roger Montgomery Posted in Economics, Global markets, Market commentary, Popular, TV Appearances.

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The defining irony of today’s stock market has got to be the yawning chasm between asset prices and their intrinsic values. As equity indices scale ever higher peaks, and as hyper-parabolic Price-to-Earnings (P/E) and Price-to-Sales (P/S) ratios are normalised, the underlying truths don’t seem to have changed. Eventually even this bubble must bust.

U.S.-based senior economist at the Centre for Economic and Policy Research (CEPR) in Washington, DC, and author of the ‘AI Bubble Monitor’, and U.S.-based antitrust and policy analyst Matt Stoller reckon this dynamic can be attributed to something Stoller calls the “Number Go Up Rule”– a systematic rewiring of institutional incentives to ensure corporate valuations ascend at all costs, and frequently favouring speculative mania over fundamentally productive or socially additive enterprises. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Insightful Insights, Investing Education, Market commentary, Popular.

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San Francisco and Lisbon-based KIÉR LIÓR provides institutional investors, family offices, and direct lenders with institutional-grade oversight, underwriting and portfolio management services for international private credit portfolios.

On the subject of Private Credit, their musings are well worth your time, remembering the comments are typically U.S. and Euro-centric, where conditions and legal frameworks may not favour lenders as much as they do in Australia.

Reflecting on a recent episode of the Credit Edge podcast featuring Goldman Sachs Chief Credit Strategist Amanda Lynam, KIÉR LIÓR Managing Director Aznaur Midov noted: continue…

by Roger Montgomery Posted in Aura Group, Economics, Market commentary.

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