Derek L. Fossier Heading into the end of the year, the investment market has given us and our clients plenty to be thankful for. Even so, more than one client contacted us recently with thanks, but also a request. Despite beating their benchmarks for 2024, these clients wanted more. Each client initially asked for a balanced portfolio focused on downside protection (and sometimes a yield target). Then, the blazing S&P 500 stock index ended September up 36% for the past 12 months. While this index has more volatility and downside than their benchmark, the Fear Of Missing Out (FOMO) can be a powerful immediate influence on even seasoned professionals. US Large Cap Growth investments have broken almost every rule from traditional investment advice. The truth is Large Cap Growth stocks, represented by either the Nasdaq or the Russell 1000 growth index, have smashed all expectations by returning an annualized 16% over the past decade. This growth, in large part driven by tech and the continuing AI revolution, has surprised value investors and professional giants like JP Morgan, who continue to project only 7% annualized gains for US large cap stock. There is no reason to expect mean reversion at any point in time, and being early can be indistinguishable from being wrong. Transformative technologies often follow a predictable pattern: innovation, adoption, euphoria into a bubble, and eventually, correction. The railroad boom of the 1840s, the internet revolution of the 1990s, and even the smartphone era of the 2010s all demonstrated this cycle. The Dot Com bubble of 2000 took 5 years to build, 1 year to burst, and from 7 to 15 years to get back to even. Getting caught on the wrong side of a bubble can be incredibly punishing. The Nasdaq index forward price-to-earnings ratio (P/E) hovers near 27, down from the peaks of the dot com era, but still elevated compared to longer term historical averages near 20. Investors placed $26B into the Nasdaq ETF (QQQ) in 2024 alone, with over a hundred ETFs focused on AI, Cryptocurrency, and hyper growth stocks representing billions more. Many of these funds launched within the last year. Some of the highly valued and highly volatile stocks include Gilead Sciences (GILD) and Palantir (PLTR) with P/E ratios above 500. At Equitas, we’ve developed comprehensive frameworks for evaluating AI investments beyond the headlines. Our Navigator system incorporates both technical and fundamental factors to automatically reposition clients between high-risk growth investments, and safety. While we expect significant volatility ahead, the underlying trend remains one of the most powerful in market history. The key to successful navigation will be maintaining exposure while building in safeguards against inevitable market excesses. Please contact us to learn more about our systematic approach to managing technology exposure.   Disclosures and Disclaimers: This information is for educational and entertainment purposes only and is not an offer to sell or solicitation to buy any security. Past performance is not a guarantee of future results.