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I’ve been fearing one other inventory market crash for the final six months. Nevertheless, shares have stored pushing up from their Trump-inspired ‘Liberation Day’ lows and — within the US and UK — at the moment are in any respect time highs.
So I’ve turned to synthetic intelligence (AI) to assist me uncover when the subsequent inventory market crash might happen. Sadly, the reply wasn’t overly illuminating. Nevertheless it did reinforce some house truths.
Right here’s what it instructed me
Unsurprisingly, ChatGPT didn’t have the reply, but it surely did say: “There is no reliable way to say when the next stock-market crash will happen — only which economic and market signals make one more likely. As of early October 2025, valuations and leverage are high while a number of macro indicators are signalling elevated risk.”
Clearly, there are some necessary themes right here, although it didn’t have the specified reply to my query. Every part in investing must be primarily based on probability-weighted outcomes. In different phrases, how doubtless one thing is to happen primarily based on knowledge and market indicators.
Now, as ChatGPT highlights (and I already knew), shares are dearer versus their earnings energy than they’ve been lately. Nevertheless it’s a sliding scale. Some shares, like Palantir and different AI newcomers have valuations which are very laborious to justify. Different components of the market look fairly low cost.
The wall of fear
This 12 months international equities have continued to climb the proverbial ‘wall of worry’. Markets have shrugged off potential shocks like commerce tensions and tariff threats, and ongoing conflicts.
Within the US, a authorities shutdown has added one other layer of uncertainty, whereas in Europe, political instability has grown. Gold has additionally seen its greatest rally for the reason that Seventies.
But regardless of this backdrop, traders stay targeted on resilient company earnings, moderating inflation, and the rising conviction that rates of interest will fall additional.
This, in fact, creates an much more harmful scenario. It could encourage traders to miss mounting dangers and push costs ever greater, stretching valuations to unsustainable ranges.
When markets rise regardless of worsening fundamentals, sentiment somewhat than earnings turns into the principle driver. That may reverse abruptly.
Investing away from bubbles
I’ve had numerous success investing in AI shares. Nevertheless, mine at the moment are more and more non-AI targeted on this setting. Considered one of which is the London Inventory Alternate Group (LSE:LSEG). For me, it stays one of many FTSE 100’s most interesting long-term alternatives, primarily based on its present valuation.
Regardless of the share value sliding roughly 21% 12 months thus far, income continues to broaden with web gross sales increasing throughout the corporate’s 4 fundamental section.
Buying and selling at round 21.5 occasions forecast earnings for 2025 and 19 occasions forecast 2026 earnings, the valuation seems to be undemanding for a high-margin, recurring-revenue enterprise.
The Microsoft partnership is starting to bear fruit, enabling AI-powered instruments throughout capital markets and indexing. On Monday, it was introduced that the London Inventory Alternate Group will let clients use its licensed knowledge to construct AI brokers on Microsoft’s Copilot Studio platform, by a brand new LSEG-managed server that connects knowledge to exterior programs.
Nevertheless, the principle threat is aggressive strain, with Bloomberg and new fintech platforms threaten pricing energy if the corporate’s innovation pipeline stalls.
Nonetheless, it’s a inventory value contemplating.
