Certainty and Doubt

Here is an interesting thought attributed to Bertrand Russell:

                “The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.”

The big technology companies, in their zeal to develop the next big thing, are spending hundreds of billions of dollars on AI systems and the data centers on which they run.  The stocks of these companies now account for almost a third of the S&P 500 Index and trade at valuations not seen since the tech bubble of the late 1990s. The Information Technology sector currently trades at an earnings multiple of 35, while the rest of the S&P 500 sells for a relatively modest 22 times earnings.  Are fools and fanatics taking charge of the stock market and leading us toward calamity?

Here is another pertinent quote. This one is from John Kenneth Galbraith.

                                       “There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”

That is another way of saying that when it comes to the future, nobody knows anything.

In light of this fact, Group W prefers to give the technology high-flyers a wide berth, limiting exposure to roughly 20% of a stock portfolio.  There are numerous high-quality investment opportunities available outside of the IT sector.  Areas such as Financials, Communications, Energy, and Industrials show significant potential for growth and currently trade at reasonable valuations.  Diversification is the key to limiting the impact of a market mishap that may lie in our uncertain future.

1 October 2025