During the recent Barron’s Roundtable, John Rogers expressed his concern that the current technology-driven market rally, led by AI companies, may be nearing its peak, drawing parallels to the dot-com era.
He acknowledges that while today’s market leaders have solid businesses, they are highly overvalued. The gap between large-cap growth stocks and small-cap value stocks is historically wide, and smaller stocks have been largely overlooked.
Additionally, he notes signs of an economic slowdown, with companies reporting reduced consumer spending and early signs of recession. Rogers sees potential value in neglected stocks, suggesting a possible market correction ahead.
Here’s an excerpt from the Roundtable:
Rogers: I feel even more strongly today than six months ago that we are getting closer to the top of this extraordinary technology rally led by AI companies. You never know when the market will peak, but the situation reminds me of the dot-com era, when stocks went up and up, until things eventually shifted and adjusted.
I understand that today’s market leaders have real businesses and earnings, but they are very expensive. The relative performance gap between large-cap growth stocks and small-cap value stocks is probably the widest it has been in history. At some point, it has to close. You never know the magic date, but smaller stocks have been utterly neglected.
Also, the economy looks to be slowing. In our visits with companies, they express increasing concern that the consumer is spending less comfortably. Several companies told us they are already experiencing a recession. That could be a catalyst for a market setback. We see value in good businesses whose stocks have been neglected.
You can find edited details from the Barron’s Roundtable here:
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