AI Mania, Inflation and the real test for investors

AI has captured the market’s imagination, but inflation may prove the more persistent test. Transformative technologies can create extraordinary long-term winners, but history shows that innovation-led booms often bring overvaluation and painful capital losses when too much capital chases too many opportunities at the wrong price. AI matters. But even the strongest investment themes can become risky when enthusiasm leaves little margin of safety. Meanwhile, the forces that helped keep inflation low for decades are beginning to unwind. Inflation may not dominate headlines like AI, but it remains one of the greatest threats to long-term purchasing power. In this month’s Markets in a Nutshell, Linda Eedes explores why valuation discipline, inflation resilience and portfolio diversification still matter.