By Clancy Yeates
Publication Date: 2025-11-13 20:45:00
As a result, the funds are “very benchmark conscious” – meaning they closely monitor the performance of stock market benchmarks, which in turn are influenced by the movements of the largest stocks in the market. McAuley said the funds would also take steps to limit their risk in the event of a bust.
“They would hedge their position against that so that they are not completely exposed to downside risks,” he said.
In contrast, Roger Montgomery, founder and chairman of Montgomery Investment Management, said AI stocks had all the hallmarks of a bubble. These included hype, high expected earnings multiples, and “bubble participants buying each other’s products.”
He predicted that there would ultimately be a bust because end users would not spend as much on AI as hoped, causing markets to drive down the valuations of these stocks.
“I’m not saying it’s imminent,” he said. “I just think that booms end, and when they reach a bubble phase, they end…”
