Market Valuation

The father of a field of mathematics known as fractal geometry, Benoit Mandelbrot, in his fantastic book, The (Mis)behaviour of Markets, observed that market price movements, unlike the smooth curves assumed in traditional financial models, are jagged and irregular, meaning that large price swings are more frequent than expected, and periods of high volatility can be followed by more high volatility. His work provides a more realistic framework for understanding and modeling risk, noting also that volatility in markets tends to cluster.

In my experience, I’ve observed those volatility clusters often mark turning points in markets. To be clear, not all periods of heightened volatility are turning points, but almost all turning points are accompanied by greater volatility. continue…

by Roger Montgomery Posted in Economics, Market commentary, Market Valuation.

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In this final part of my two-part series on General Purpose Technology (GPT) booms, I explain how these cycles typically end. History shows that even world-changing technologies – from cars to commercial flight –  delivered poor outcomes for most early investors. This is because technology trends eventually run into the reality that customers don’t spend money in a straight line (their demand rises and falls), and also the concept of “creative destruction” (wherein new technology leads to the obsolescence of outdated products). These cycles are exactly why it’s important to diversify and regularly rebalance your portfolio. continue…

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

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Wall Street on Thursday experienced a stunning reversal in sentiment. Impressive results from the company spearheading the artificial intelligence (AI) revolution, Nvidia (NVDA), and a strong September jobs report initially drove the Nasdaq up more than two per cent.

On Wednesday, Nvidia’s CEO Jensen Huang had described demand for its Blackwell chips as “off the charts”, and dismissed fears of an AI bubble on the company’s earnings call.

Meanwhile, the U.S. economy added 119,000 jobs in September, meaning the labour market was in better shape than previously thought. continue…

by Roger Montgomery Posted in Companies, Global markets, Investing Education, Market commentary, Market Valuation.

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I joined Phil Clark on Nightlife to explain why the market’s sharp fall may reflect growing doubts about the artificial intelligence (AI) boom. I argued that while AI is a powerful General Purpose Technology (GPT) that may change the world (like cars or the internet), it might not be as lucrative as investors hope. Today we’re seeing super-charged share prices, huge data-centre spending, complex vendor-financing deals and big losses at firms like OpenAI. Whether this proves a correction or a bust is unknowable, so my message to investors was simple: regularly rebalance and diversify beyond the AI winners.

Tune into the full episode from 4:49 here: ABC Nightlife Finance 

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

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In this blog post, I (finally) take the focus off the artificial intelligence (AI) boom/bubble. Instead, I want to look at whether there are other factors investors should be considering when it comes to time to rebalance portfolios, and as 2025 concludes and 2026 commences.

First – and granted this one’s a bit of fun – the Santa Claus rally. Is there any evidence that such a thing exists? continue…

by Roger Montgomery Posted in Global markets, Market commentary, Market Valuation.

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I joined Juliette Saly from Ausbiz yesterday to discuss the surge in gold buying and why it may be driven more by fear than logic. With queues forming outside bullion dealers, many investors are chasing gold as a hedge against inflation, currency debasement, or geopolitical risk – reasons that have existed for years. Yet, as prices hit record highs and physical gold carries steep costs and little utility, the rush looks more like Fear Of Missing Out (FOMO) than sound investing. While gold can’t generate income and its vertical price rise seems unsustainable, those still bullish might consider exchange-traded funds (ETFs) over physical bars, which offer lower friction and better financial sense.
Catch the episode on Ausbiz here: Are we paying too much for gold?

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by Roger Montgomery Posted in Market Valuation, TV Appearances.

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Markets sit at elevated levels, fuelled by optimism around artificial intelligence and the promise of lasting productivity gains. Yet beneath the excitement lies a complex mix of valuations, momentum, and risk – raising important questions about how investors can stay positioned if sentiment shifts.

Markets are expensive – observations and implications

There is a conga line of analysts, fund managers and commentators pointing out the extremes many traditional or conventional measures of value have now reached.  From price-to-earnings, price-to-book, and market-cap-to-Gross Domestic Product (GDP) to earnings and dividend yields, the U.S. S&P 500 is in rarified air when it comes to the price investors are willing to pay for exposure to future growth. continue…

by Roger Montgomery Posted in Aura Group, Digital Asset Funds Management, Market commentary, Market Valuation.

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Yesterday on Ausbiz with Juliette Saly, I discussed why record-high markets may carry more risks than opportunities. While the artificial intelligence (AI) boom has powered enthusiasm, I cautioned that valuations across the broader market are now at unprecedented levels, with all companies effectively being priced as winners – something history shows is unsustainable. continue…

by Roger Montgomery Posted in Market commentary, Market Valuation, TV Appearances.

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In this week’s video insight I take a closer look at record stock markets, what’s driving them to new highs, and what that might mean for investors. The S&P 500 is trading at historic levels on measures such as price-to-earnings and price-to-book ratios, with much of the enthusiasm powered by the artificial intelligence (AI) boom. Companies are spending billions on cloud, semiconductors and infrastructure, while revenues are still catching up. It’s an exciting period of innovation, but also one where history reminds us markets often price in future growth well before it materialises. continue…

by Roger Montgomery Posted in Aura Group, Digital Asset Funds Management, Market commentary, Market Valuation, Video Insights.

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The artificial intelligence (AI) arms race shows no signs of slowing, and this week’s fourth quarter results announcement by Google, owned by Alphabet Inc. (NASDAQ:GOOG), suggests that significant investment is still seen as a necessity – especially when it comes to powering the next generation of AI models. Following the release of China’s DeepSeek, the question is not only whether the hefty spending is sustainable, but whether it truly gives U.S. tech giants the edge they’re hoping for? continue…

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

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