There’s something about a fall fair that feels a little chaotic in the best way. The smell of fried dough is coming from one direction, kids are running toward the rides, and somewhere someone is spending far too much money trying to win an oversized stuffed animal. There’s a lot happening at once, but somehow, it all works.
The stock market feels a little like that this fall. Conflicts overseas, higher interest rates, questions about AI, oil prices, and an election season are all competing for our attention. Yet while the headlines have been doing their best impression of a crowded midway, stocks have continued moving higher, with the Nasdaq recently reaching another record high.
If we walk past the noise, there’s a lot of substance underneath. Company profits remain strong, the economy continues to grow, and consumers have been surprisingly resilient. One reason is that many homeowners are still sitting comfortably with low mortgage rates they locked in several years ago, making them less sensitive to today’s higher rates. Then there’s AI, still the attraction with the longest line. Investors are no longer impressed simply by how much companies are spending. They want to know if the ride is worth the ticket. So far, we’re seeing benefits spread beyond the largest technology companies to businesses making chips, building infrastructure, and finding practical ways to use AI.
Of course, every fair has a ride that makes you hesitate before getting on. Right now, that’s interest rates. Higher rates can make borrowing more expensive and create some bumps for the market. While today’s rates feel high after years of unusually low rates, they aren’t particularly unusual historically. That doesn’t mean we won’t experience a few stomach dropping moments along the way.
But one bumpy ride doesn’t ruin the whole fair. Businesses are profitable, the economy is growing, and opportunities are showing up in more than one corner of the market. There are certainly risks worth watching, but there are also plenty of reasons to remain invested.
Maybe that’s the lesson from the fair this fall. You don’t have to ride every ride, play every game, or spend $40 trying to win a stuffed animal that probably costs $10. Investing works much the same way. Stay diversified, choose your opportunities carefully, and don’t let all the noise from the midway distract you from the bigger picture.
As always, please reach out if you have any questions. Thank you for your continued trust.
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