Roughly 100 years ago, electricity began to course through the developed world, transforming lives and sparking a stock price surge. One need not be an economic historian to know that the Great Depression of the 1930s stemmed, in part, from untrammeled risk-taking in the Roaring ‘20s.
Today, signs of investor restraint are once again difficult to find. In aggregate, U.S. stock prices are roughly 45% above the top of what I consider to be their fair-value trading range. I would view stocks as overvalued even if we knew with certainty that artificial intelligence—the probable cause of investors’ recent enthusiasm—would ultimately transform every facet of human life, delivering economic benefits on par with the advent of electricity.
