The Commercial Real Estate Alpha Site

Stocks have been on a steady climb, with the S&P 500 up 14% nearly halfway through 2024 and closing at 29 records along the way. The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. Investors look sanguine – as the economy has remained stronger than almost anyone predicted and the artificial intelligence boom continues to drive  huge gains, it appears they have good reason to be.

We’re students of investing and using history as a guide, periods of extreme market calm rarely last. One of the results of a strong economy and calm markets is that they often create an environment in which investors let their guard down and turn to riskier, more speculative investments in their hunt for returns. Investors are continuing to double down on bets that are working, particularly large-cap tech stocks – a narrow rally may leave the market vulnerable if a handful of companies can’t meet the lofty expectations. Time will tell.

Some examples of speculative investments may be similar to the AI boom companies or even other technologies that are not mainstream but offer some optimism. Think of Fisker, Lucid, Rivian versus Tesla.