The Reserve Bank governor Michele Bullock has again warned of the risks a severe market downturn could have on financial stability.
Addressing an Australian business economists gathering, Ms Bullock said central bank governors are puzzled about why markets are so sanguine in the face of the growing economic and risks, saying “I think some people are worried that it might all end in tears”.
When asked whether the RBA governor could be right, chief investment officer at Forager Funds, Steve Johnson said he thinks there are parts of the equity markets that have not participated in the rally at all and are sensibly priced.
He says the AI boom in markets is reminiscent of the dot-com bubble that saw US tech stocks rise in the US in the 90s and early 2000s, before the bubble “burst”, saying “I think (AI is) one of those bubbles that I think is very, very clear that people are going to look back on as some stupidity in terms of people having FOMO and wanting to chase that bubble.”
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