"The stock market is undergoing a record rally that hasn't happened in decades. 2025 could be the third year in a row in which the S&P 500 delivers over 25% in total returns. The outlook could get even rosier if the Federal Reserve cuts interest rates and smoothly guides the economy to more growth. Considering AI, many seem convinced that this rally is truly different."
"However, it often takes little for a lot to go wrong, and go wrong very quickly. Black Swan events can ruin the market's mood and form a broader downtrend. DeepSeek caused significant panic early this year, and something like this can happen again. More recently, OpenAI's CEO, Sam Altman, agreed with the sentiment that the market was in an AI bubble. Wall Street's latest darling, , is down ~17% from its peak since then."
The stock market has experienced a record rally, with 2025 possibly the third consecutive year of over 25% total returns for the S&P 500. Lower interest rates and stronger economic growth could further support gains. Sudden shocks and Black Swan events can reverse market optimism quickly, as seen with DeepSeek and later worries about an AI-driven bubble. Investors should maintain exposure to defensive dividend stocks that hold pricing power and stable cash flows during downturns. Waste Management exemplifies such a business because waste collection is essential, legally required, cost-effective through scale, and difficult for consumers to cut back on in recessions.
Read at 24/7 Wall St.
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