Dot-com bubble 2.0? Dr Richard Smith, chairman for the Study of Cycles
US-based investor Dr Richard Smith unpacks the implications of a persistently higher inflationary environment and rising interest rates on the financial markets, with a particular focus on US equities. A Goldilocks era for equity markets seems to be coming to an end. The Fed is taking a more hawkish stance as the economic indicators have been flashing red. Inflation, the primary threat to equity markets, has been a major headwind for emerging tech, the high-growth businesses that were the standout winners at the start of the pandemic. Dr Smith emphasises the importance of understanding the behavioural dynamics of investing, especially during market downturns. He says that given human nature hasn’t changed in the last 20 years and valuations are at their highest levels in history, a market crash such as the dot-com bubble can be repeated.