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Investment History Episode 20: The Market After High Interest Rates and Artificial Intelligence, Why Must Investors Return to the Basics? After the pandemic crash of 2020, the stock market experienced one of the fastest recoveries in modern financial history. Strong policy responses from governments and central banks, ultra-low interest rates, liquidity injections, digital transformation, and the growth expectations surrounding technology companies all combined to push markets ahead of the real economy. Then, in 2022, high inflation and rising interest rates shook growth stocks and long-term bonds at the same time. Investors realized how sensitive asset prices had become to the low-rate environment. In 2023, a powerful new growth narrative appeared again. That narrative was artificial intelligence. Markets began reflecting expectations for the end of rate hikes, slowing inflation, cost reductions and margin improvement at large technology companies, and growing investment in semiconduc...

Investment History Episode 19: The 2023 Artificial Intelligence Rally and Big Tech Concentration, Why Did the Market Return to Growth Stocks? The market of 2022 experienced a powerful shock from inflation and rising interest rates. Growth stocks and technology stocks that had received high valuations during the period of ultra-low rates and abundant liquidity after the pandemic suffered sharp corrections. Long-term bonds also failed to avoid the damage caused by rising yields. Investors belatedly realized how much low interest rates had supported almost every asset price. But in 2023, market sentiment began to change again. Inflation started to slow compared with the previous year, and investors began expecting that the cycle of central-bank rate hikes would eventually end. Recession fears remained, but the market responded first to the possibility that the worst phase of inflation had passed. At the same time, a new investment narrative emerged. That narrative was artificial intellige...