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3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble

Author: Richard Romlin, CFA

The Visual Capitalist put together these great talking points contrasting how today’s A.I. hype is vastly different than the Dot-Com Bubble of 1999 and 2000.



  1. Valuations are much Lower Today– Stock Valuations are much lower than they were during the peak of the dot-com bubble when looking at the forward P/E of the Nasdaq 100.
  2. Investors aren’t irrationally exuberant like they were during the dot-com bubble – Equity fund flows during the dot-com bubble increased 75% in 2000 from the year prior, hitting $352 billion. In contrast, equity fund flows have been negative in both 2022 and 2023.
  3. Companies are much more established now compared to the dot-com era – In 1999, there were 370 technology IPOs which compares to just 6 technology IPOs in 2022. Furthermore, the median age of a technology company going public in 1999 was just 4 years old, which compares to a median company age of 15 years in 2022.

 

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April 17, 2024

April 17, 2024

Topic: A Look at Gold. What’s going on with its recent rally?

Author: Richard Romlin, CFA

Gold recently broke through prior resistance levels to reach new all-time highs in April, hitting $2,380/ounce.

  • We generally don’t recommend allocating large position sizes to gold due to its lack of future earnings or cash flow generation hence making it impossible to value.
  • We do, however, recognize that having a gold position can provide uncorrelated returns for a portfolio to offset some market risk, but figuring out when to sell is tricky due to its lack of earnings or cash flow generation which is the cornerstone of a stock or bond.
  • The likely path of least resistance is for more gains in gold here in the short run.

Adam Turnquist, LPL’s Chief Technical Strategist, believes that gold may continue to rally due to the following:

  • Macro conditions remain supportive for gold, including elevated geopolitical tensions, forecasts for receding yields, and the possibility for a weaker dollar.
  • Global demand among central banks has notably accelerated.
  • A rebound in demand from gold-related ETFs could provide additional support for gold's price.