Caution Required!

11 September 2025

Equity markets have been fueled by liquidity and excessively optimistic tech / AI valuations. Markets have shrugged off most concerns but pressure is building!

“At the root of all financial bubbles is a good idea carried to excess.” - Seth Klarman

Caution required!

NFP missing expectations, with negative June revisions, NVDA down 7% after very decent earnings and guidance, lingering US trade ambiguity and FED leardership tractations, political change in Japan and chaos in France…yet equity markets have brushed it all and hover near highs!

Equity markets are proving to be extremely resilient at a point in time where valuations are extended and, since Trump’s second term, geopolitical and economic policy uncertainty have held the higher grounds.

As valuations get closer to dotcom bubble peaks, investors are left with a burning question:

Stay invested in equity markets, particularly US, as they make new highs and hope for the best with mounting uncertainety or,

start taking profits with few alternatives to re-invest as risks mount, and potentially miss out on a futher bullish run.

The market is giving us mixed signals, compelling investors to look deeper into their allocations and reconsider risk on trades.

On one side the USD is breaking down and Gold is breaking out, US job numbers were far from optimistic.

On the other side, equity markets remain strong and near all time highs, supported by forecasted FED cuts and upcoming tail winds from the “Big beautiful bill”’s tax refunds, but mainly counting on tech and doubling down on AI’s great story.

The current market concentration towards AI and tech is at worrisome levels.

“History shows us, over and over, that bull markets can go well beyond rational valuation levels as long as the outlook for future earnings is positive.” - Peter Bernstein

Forward earnings are still looking positive but we are at a stage when this market action could turn on a dime!

Long term earning of the Mag 7 have been moving lower but P/Es are still growing, margin expansion will not carry on eternally.

Is the tech/AI Sisyphus reaching it’s mountain top? – it may not happen tomorrow but the indications are there.

Be careful, as when the rock rolls down, it rolls down very quickly!

About Stewards Investment Capital

Stewards Investment Capital is a boutique investment advisory firm with a track record of over 25 years under the Stewards Group of Financial Companies. Strategically positioned in Mauritius, South Africa, and the USA, we tailor niche investment solutions to high-net-worth individuals and institutional investors.

Guided by a high-alpha approach and fuelled by a passion to be a catalyst for growth, our commitment to our investors is rooted in our mission to grow and nurture their wealth, building lasting fortunes and creating enduring legacies to achieve real freedom. This endeavour is powered by our team of passionate investment professionals, each contributing decades of experience and expertise to our firm.

For further information about Stewards Investment Capital, please visit stewardsinvestment.com/

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Suneeta Motala
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Email: suneetamotala@stewards.global, thestewards@stewards.global

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