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Economic Times
3 days ago
- Business
- Economic Times
Skip the AI FOMO, cash in where no one's looking: Bernstein backs old-school payouts and warns AI may be the next dot-com bubble
ChatGPT's role in market surge Live Events Cycles do not last forever Why dividend stocks matter now Utilities quietly hold their own (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Richard Bernstein, Chief Investment Officer at Richard Bernstein Advisors , sees too much heat in the artificial intelligence trade. In a note dated 30 June, he drew a sharp line between today's AI rush and earlier booms that went too far.'Investors seem universally focused on 'AI', which seems eerily similar to the '.com' stocks of the Technology Bubble and the 'tronics' craze of the 1960s,' Bernstein wrote. He added that while AI dominates headlines, 'we see lots of attractive, admittedly boring, dividend-paying themes.'Since OpenAI's ChatGPT appeared in November 2022, the numbers have been hard to ignore. The S&P 500 has gained 54 percent. The Nasdaq 100 has soared 90 percent. Some valuations have pushed back to levels last seen just before the dot-com crash or even the market peak in has made investors pile into anything labelled AI. But Bernstein says that might not be smart money at this stage. He made clear he is not calling the exact top. Still, trends do not run forever.'The best time to invest in something is when it's out of favour — not after a massive rally has occurred,' he laid out how investor moods flip as markets change. Early in a bull run, fear rules. People look for dividends and lower-risk bets. Once they feel bold, they chase high growth stories instead.'At the beginning of a bull market when momentum and beta strategies are by definition most rewarded, investors' fears lead them to emphasise dividends and lower-beta equities,' he said. 'In later-cycle periods when dividends and lower beta become more attractive, investors' confidence leads them to risk-taking and momentum investing.'His take? We are no longer early in this cycle. 'We clearly are not at the beginning of a bull market and, as we've previously written, the profits cycle is starting to decelerate,' he where does that leave investors who do not want to get burnt? Bernstein says boring can be smart. He points to dividend stocks, especially in the utilities sector, as ready for a fresh companies pay steady sums to shareholders. Some pocket the money. Many reinvest it back into the stock, which helps their position grow over time.'One of the easiest methods for building wealth has historically been the power of compounding dividends,' Bernstein said. 'Compounding dividends is boring as all get out, but it's been highly successful through time.'People might assume high-flying tech leaves old utility stocks in the dust. Bernstein says that is not quite true.'In fact, compounding dividend income has been so successful, that the Dow Jones Utilities Index's returns have been roughly neck-and-neck with NASDAQ returns since NASDAQ's inception in 1971,' he do not need to pick single stocks to get in. Funds like the SPDR S&P Dividend ETF and Vanguard Dividend Appreciation ETF spread the bets and deliver a mix of steady message is not about ditching technology altogether. It is about seeing the pattern. Big fads rise fast. They fall just as fast when the shine wears off. While the AI hype carries on, he thinks dividends could quietly do the heavy trick, he suggests, is to look where others are not. Sometimes the most boring corner of the market can end up paying the best.
Economic Times
3 days ago
- Business
- Economic Times
AI stocks could crash like Dot-Coms, says Wall Street veteran — suggests these safer bets instead
AI stocks are beginning to resemble the dot-com bubble, warned a seasoned Wall Street investor, Richard Bernstein, as per a report. Bernstein, who is the CIO of Richard Bernstein Advisors, based on his analysis, said that it may be time for investors to step back from the hype and consider something a bit less thrilling but possibly more rewarding in the long term, according to Business Insider. He wrote in a post that, "Investors seem universally focused on 'AI' which seems eerily similar to the '.com' stocks of the Technology Bubble and the 'tronics' craze of the 1960s. Meanwhile, we see lots of attractive, admittedly boring, dividend-paying themes," as quoted in the report. ALSO READ: Trump's tariff drama is fake and just for TV, says White House source in bombshell leak Since ChatGPT went live in late 2022, the stock market has experienced dramatic gains, particularly in tech stocks, and the S&P 500 has jumped 54%, and the Nasdaq 100 has increased 90%, as reported by Business Insider. Even valuations are at levels that haven't been reached since the peak of the dot-com bubble—or even the 1929 market peak, according to the report. Even though Bernstein said he is not calling a top, but has pointed out that trades eventually go the other way, and the best time to invest in something is when it's out of favour, not when a major rally has already occurred, as reported by Business explained that, "At the beginning of a bull market when momentum and beta strategies are by definition most rewarded, investors' fears leads them to emphasize dividends and lower-beta equities," adding, "In later-cycle periods when dividends and lower beta become more attractive, investors' confidence leads them to risk-taking and momentum investing," as quoted in the report. Bernstein pointed out that, "We clearly are not at the beginning of a bull market and, as we've previously written, the profits cycle is starting to decelerate," as quoted in the READ: Xi Jinping losing his grip? Signs emerge of chaos in China's military and political circles Bernstein highlighted that currently dividend stocks could be ripe for appreciation and also shared that he especially likes utilities stocks, which are known for issuing dividends, as reported by Business Insider. He also suggested that, "One of the easiest methods for building wealth has historically been the power of compounding dividends. Compounding dividends is boring as all get out, but it's been highly successful through time," adding that, "In fact, compounding dividend income has been so successful, that the Dow Jones Utilities Index's returns have been roughly neck-and-neck with NASDAQ returns since NASDAQ's inception in 1971!," as quoted by Business Insider. Is Bernstein saying the AI stock boom is over?Not exactly. He's not calling the top, but he believes the risks are rising, and it's a good time to be cautious. What's the benefit of reinvesting dividends? Reinvesting allows your investment to compound over time, essentially earning money on your money.
Time of India
3 days ago
- Business
- Time of India
AI stocks could crash like Dot-Coms, says Wall Street veteran — suggests these safer bets instead
AI stocks are beginning to resemble the dot-com bubble , warned a seasoned Wall Street investor, Richard Bernstein, as per a report. Bernstein, who is the CIO of Richard Bernstein Advisors, based on his analysis, said that it may be time for investors to step back from the hype and consider something a bit less thrilling but possibly more rewarding in the long term, according to Business Insider. AI Hype Mirrors Past Market Bubbles He wrote in a post that, "Investors seem universally focused on 'AI' which seems eerily similar to the '.com' stocks of the Technology Bubble and the 'tronics' craze of the 1960s. Meanwhile, we see lots of attractive, admittedly boring, dividend-paying themes," as quoted in the report. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Treatment That Might Help You Against Knee Pain Knee pain | search ads Find Now Undo ALSO READ: Trump's tariff drama is fake and just for TV, says White House source in bombshell leak Markets Soar as AI Optimism Drives Major Gains Since ChatGPT went live in late 2022, the stock market has experienced dramatic gains, particularly in tech stocks, and the S&P 500 has jumped 54%, and the Nasdaq 100 has increased 90%, as reported by Business Insider. Even valuations are at levels that haven't been reached since the peak of the dot-com bubble—or even the 1929 market peak, according to the report. Live Events Caution Advised as Rally Shows Signs of Maturity Even though Bernstein said he is not calling a top, but has pointed out that trades eventually go the other way, and the best time to invest in something is when it's out of favour, not when a major rally has already occurred, as reported by Business Insider. He explained that, "At the beginning of a bull market when momentum and beta strategies are by definition most rewarded, investors' fears leads them to emphasize dividends and lower-beta equities," adding, "In later-cycle periods when dividends and lower beta become more attractive, investors' confidence leads them to risk-taking and momentum investing," as quoted in the report. Bernstein pointed out that, "We clearly are not at the beginning of a bull market and, as we've previously written, the profits cycle is starting to decelerate," as quoted in the report. ALSO READ: Xi Jinping losing his grip? Signs emerge of chaos in China's military and political circles Dividend Stocks Positioned for a Comeback Bernstein highlighted that currently dividend stocks could be ripe for appreciation and also shared that he especially likes utilities stocks, which are known for issuing dividends, as reported by Business Insider. He also suggested that, "One of the easiest methods for building wealth has historically been the power of compounding dividends. Compounding dividends is boring as all get out, but it's been highly successful through time," adding that, "In fact, compounding dividend income has been so successful, that the Dow Jones Utilities Index's returns have been roughly neck-and-neck with NASDAQ returns since NASDAQ's inception in 1971!," as quoted by Business Insider. FAQs Is Bernstein saying the AI stock boom is over? Not exactly. He's not calling the top, but he believes the risks are rising, and it's a good time to be cautious. What's the benefit of reinvesting dividends? Reinvesting allows your investment to compound over time, essentially earning money on your money.
Business Insider
5 days ago
- Business
- Business Insider
AI stocks look 'eerily similar' to the dot-com craze, warns CIO overseeing $15 billion. Invest in this 'boring' corner of the market instead.
The intoxicating buzz around artificial intelligence stocks over the last few years looks concerningly like the dot-com bubble, top investor Richard Bernstein warns. The CIO at $15 billion Richard Bernstein Advisors wrote in a June 30 post that the AI trade is starting to look rich, and that it may be time for investors to turn their attention toward a more "boring" corner of the market: dividend stocks. "Investors seem universally focused on 'AI' which seems eerily similar to the '.com' stocks of the Technology Bubble and the 'tronics' craze of the 1960s. Meanwhile, we see lots of attractive, admittedly boring, dividend-paying themes," Bernstein wrote. Since ChatGPT hit the market in November 2022, the S&P 500 and Nasdaq 100 have risen 54% and 90%, respectively. Valuations, by some measures, have surged back toward record highs, rivaling levels seen during the dot-com bubble and the 1929 peak. While Bernstein said he's not calling a top, trades eventually go the other way, and the best time to invest in something is when it's out of favor — not when a major rally has already occurred. "At the beginning of a bull market when momentum and beta strategies are by definition most rewarded, investors' fears leads them to emphasize dividends and lower-beta equities," he wrote. "In later-cycle periods when dividends and lower beta become more attractive, investors' confidence leads them to risk-taking and momentum investing." "We clearly are not at the beginning of a bull market and, as we've previously written, the profits cycle is starting to decelerate," he added. That's why dividend stocks could be ripe for appreciation, Bernstein said. He especially likes utilities stocks, which are known for issuing dividends. Dividends are payments that a company sends out to shareholders on a regular basis (usually quarterly), and they can be used by investors as income or reinvested in the stock. If reinvested, your position in the stock can compound. When considering compounding returns, dividend stocks actually hold their own against high-flying tech stocks, Bernstein said. "One of the easiest methods for building wealth has historically been the power of compounding dividends. Compounding dividends is boring as all get out, but it's been highly successful through time." "In fact, compounding dividend income has been so successful, that the Dow Jones Utilities Index's returns have been roughly neck-and-neck with NASDAQ returns since NASDAQ's inception in 1971!" Investors can gain broad exposure to dividend stocks through funds like the SPDR S&P Dividend ETF (SDY), Vanguard Dividend Appreciation ETF (VIG), and more.
