David Brancaccio reflects on thousands of conversations
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A reminder that whatever the headline, when it comes to investing, do not do anything rash. I'm David Brancaccio in Los Angeles. First, there's news the Iran conflict's effect on gas prices has driven up the Consumer Price Index, which shows today prices up nine-tenths percent in March, up 3.3 percent in a year, the highest in two years, gasoline up 21 percent last month. The keynote here today is a conversation with the Princeton economics professor who has argued for half a century that you cannot time when to get in or out of stocks, Burton Malkiel. Princeton professor emeritus is author of what is arguably the most influential investing book of all time, A Random Walk Down Wall Street, now in a 13th edition.
Here's an excerpt from our conversation about concern now that stocks related to artificial intelligence are a bubble that could pop.
Is it possible that we are in the midst of an AI bubble? Absolutely. We have had bubbles in the stock market with every revolutionary event.
What economic impact does the Iran conflict have on gas prices?
We had this with the internet revolution when the market then collapsed dramatically. and went down 40% between the beginning of 2000 and the end of 2002. But we don't know if we're in the top of the third inning of an AI bubble or the bottom of the ninth.
Now, some say it's a bubble. Others say relax. I personally never relax. But for those worried it's a bubble that could pop... What should they do given your experience over more than half a century?
For those listeners who are worried. The market is a lot lower in terms of its prices relative to earnings today than they were at the top of the Internet bubble. When a lot of those Internet companies sold at 100 times earnings or more, the market's not cheap today. but it is far more reasonably priced than it was then. Yes, rebalance. If your equities are too large now, definitely rebalance. Do not, do not try to time the market. You'll never get it right.
Random Walk author Burton Malkiel still going strong at 93. Our full conversation, streamable from marketplace.org now.
This is my last day hosting the Marketplace Morning Report. I'm shifting to a new role still over here that I'm very jazzed about. I'll be our special correspondent covering future effects, decisions now that shape our economic futures, a sleuth for consequences, if you will. But thinking back on the 13 years covering Brexit, the inflation surge, and now let's call it reverse globalization, things stick with me like from April 2020. The economic narrative now is horrifying, and we've been facing it head on. For instance, today we'll be reporting data likely showing that more than 20 million Americans were thrown out of work over the last four weeks. Also from the archive, the time I pressed famed economist Paul Krugman on freer trade and globalization being a big cause of economic inequality.
Krugman's research says trade is unfairly blamed, and listen to how he swats this flea. You think...
The trade issue is overblown. I've got a lot of personal human capital invested in trade because that's what I did. That's what I got the Swedish thingy for.
The Swedish thingy, yes. The Swedish thingy. But look. Dr. Krugman essentially clobbers my point using his Nobel Prize in economics. Final score, Krugman won, Brancaccio zero. The only Swedish thingy I got is a packet of meatballs from Ikea. Another moment reminds us of the importance of local journalism.
Is there a possibility of an AI bubble in the stock market?
I was working on a series about news deserts in America, places essentially devoid of local news coverage now. I was along the border in Del Rio, Texas, site of a big story a few years earlier when thousands of refugees from Haiti were detained under a bridge across the Rio Grande. Border Patrol wasn't talking, and to get the story, it took an experienced local reporter. One of that reporter, Karen Gleason's longtime connections, was Del Rio's mayor, an official who had permission to enter the camp of migrants where news media had been excluded. Gleason told it like this.
He goes, we're going to hide you in the back of my car.
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