3/8/24 Market Moment
By Randy Williams Gurian on March 8, 2024
Rallies that Last
I am forever amazed at how many stock-market rallies catch investors by surprise. Maybe Mr. Market is to blame. After all, isn’t he the one who convinces most people the rally cannot last, creating fear so investors remain on the sidelines? How does one know if the current rally can last and if now is still a good time to invest in the market?
During the early phases of the internet, I recall jumping into the back of a cab in New York City and the cab driver asking me if I had bought shares of the latest hot IPO at the open, and then telling me he did and the stock had already made him money. During that craze, it seemed everyone had a new idea that would make money selling something on the internet. In truth, most of those ideas never amounted to anything, and investors who bought shares lost their money.
Being tricked by Mr. Market is bad enough, so how does one know if buying into the market during periods of overly bullish sentiment is a good idea? I contend one must understand the business case before joining the party, and I think the business case for AI is solid, and because it is solid, everyone wants a piece of the pie. But even before the use case, all the equipment used to process large language models must be upgraded. Those upgrades will cost money, and there will be many companies benefitting from the AI buildout. Following that, companies will use AI to become more efficient, which should add to overall profits. Rallies can last if earnings materialize, which I think will occur with AI.
I am headed to Spring Training this weekend to catch a couple of Mariners games in the sunshine. It is difficult to gain a good understanding of how the season will go by watching pre-season games, but it does give fans a glimpse of their favorite players up close. In a major league ballpark, typically you are far away from the players. At Spring Training, you are close, which makes the games that much more entertaining, plus you get to see the young talent that may make it to the show sometime in 2024. Go Mariners!