Right now, there is likely at least some area of the global economy or markets that can fit any narrative. For the more optimistic, signs of sustained economic growth, stabilizing inflation, and declines in interest rates create a general environment that is supportive of corporate earnings and constructive for financial markets, despite the risks clouding the outlook.
For those with a bearish bent, there are some indications that impact those risks, particularly tied to U.S. trade policy. Further, real estate markets continue to paint a bleak picture as activity remains depressed against broader economic uncertainty and elevated interest rates. Housing market metrics, outside of prices, are drawing comparisons to the post-Financial Crisis period, while the continued weakness in building permits (down more than 10% in Canada and the U.S. year-to-date) suggests, tides are not going to turn anytime soon. This is not a positive omen for real estate stocks, which are among the few segments of the market that have been down over the last year. After a strong decade, construction, real estate and the vast number of supporting businesses are feeling like they are in a recession.
That said, while new construction in aggregate is stagnant, areas related to the burgeoning artificial intelligence (AI) revolution are booming. Investment in data centers¹ in the U.S. has more than doubled over the last two years, while business expenditure on information processing equipment² and software³ has provided a disproportionate boost to overall growth so far this year. Trends and tax incentives point to this upswing being sustained.
The jury, however, is still out on whether the financial market exposures tied to AI constitute a secular boom or a speculative bubble. The Goldman Sachs AI Leaders Index⁴, which tracks the performance of stocks of leading companies in the AI space, is up more than 100% over the past 12 months and 900% over the last three years. This exponential gain has pushed valuations to levels that conjure memories of Tech stocks at the turn of the millennium — that is, unless these companies are actually able to see the potential stratospheric gains of this still-nascent technology touted by its evangelists translate into earnings, at which point they may still represent a bargain (a similar argument was made as a quarter century ago). There will likely be more losers than winners – some boom and mostly bubble.
While valuations elsewhere appear generally more reasonable, there are classic signs of speculative fervour in the other pockets of the marketplace. The reemergence of investing in speculative areas such as cryptocurrencies (the Bloomberg Galaxy Crypto Index⁵ is up 70% since March), meme stocks (UBS Meme Stock Index⁶ is up 63% over that same span), and special-purpose acquisition companies (SPACs; more than 100 of these blank cheque companies have cumulatively raised more than US$20 billion⁷ this year after losing more than US$100 billion⁸ in market value over the prior four years) suggests growing irrational exuberance, to borrow from former U.S. Federal Reserve (Fed) Governor Greenspan⁹. Bubbly.
Another asset that is potentially finding itself increasingly beholden to swings in sentiment is gold. The yellow metal has been swept up by a perfect storm of elevated inflation, a softening U.S. dollar, geopolitical uncertainty, and central bank policy easing, contributing to a surge in investor demand for the commodity that has pushed its price up 50% for the year and more than 100% since 2023. While there is some fundamental argument for this surge in price, given gold’s historical role as a store of value, the movements are significant considering the commodity’s lack of cash flows and limited industrial and consumer use. It is noteworthy that from a macro perspective, the rush of money into safe havens is traditionally more of a counter-cyclical sign than a broadly bullish one.
All of this raises the problem of trying to identify bubbles, booms, and busts. Signals can get mixed, and the true nature of movements is not clear until it is too late to do anything about it. That’s the “I knew it phase.” Accordingly, while investors can clearly benefit from long-term investment themes, it remains important to maintain discipline in the investment process. One’s future return expectations cannot become detached from the economic reality – simple but not easy.
The divergence of fortunes within even buoyant markets emphasizes the importance of diversification. Spreading investments across assets, sectors, and geographies is sound risk management, but it also casts a wider net that can help ensure investors have exposure to the next big thing that captures the markets’ imagination.
¹ United States Census Bureau, Value of Private Construction Put in Place – Seasonally Adjusted Annual Rate, October 31, 2025, https://www.census.gov/construction/c30/xlsx/privsatime.xlsx
² Federal Reserve Bank of St. Louis, Contributions to Percent Change in Real Gross Domestic Product: Gross Private Domestic Investment: Fixed Investment: Nonresidential: Equipment: Information Processing Equipment (Y034RY2Q224SBEA), October 31, 2025, https://fred.stlouisfed.org/series/Y034RY2Q224SBEA
³ Ibid.
⁴ The Goldman Sachs AI Leaders index is an equally weighted basket composed of the leading companies in the AI space across semiconductors, data centers, infrastructure, power and software.
⁵ Bloomberg Galaxy Crypto Index is designed to measure the performance of the largest cryptocurrencies traded in USD.
⁶ The UBS meme index tracks the performance of 15 U.S.-listed stocks that gained popularity via online networks and social media platforms.
⁷ SPAC Insider, Data, Stats, Summary by year, October 31, 2025, https://www.spacinsider.com/data/stats
⁸ Wall Street Journal, Company Insiders Made Billions Before SPAC Bust, May 30, 2023, https://www.wsj.com/finance/company-insiders-made-billions-before-spac-bust-4607a869
⁹ The Federal Reserve Board, Remarks by Chairman Alan Greenspan, The Challenge of Central Banking in a Democratic Society, December 5, 1996, https://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm
Guardian Partners Inc. (GPI) is providing, with permission, this market commentary, which was co-authored by Guardian Capital LP (GCLP) and GPI. GCLP is an affiliate of GPI, and is both a sub-advisor to certain GPI accounts and the Advisor and Fund Manager to the Guardian Capital LP investment funds offered to GPI clients.
This commentary is for general informational purposes only and does not constitute investment, financial, legal, accounting, tax advice or a recommendation to buy, sell or hold a security. It shall under no circumstances be considered an offer or solicitation to deal in any product or security mentioned herein. It is only intended for the audience to whom it has been distributed and may not be reproduced or redistributed without the consent of Guardian Partners Inc. (“GPI”). This information is not intended for distribution into any jurisdiction where such distribution is restricted by law or regulation.
The opinions expressed are as of the published date and are subject to change without notice. Assumptions, opinions and estimates are provided for illustrative purposes only and are subject to significant limitations. Reliance upon this information is at the sole discretion of the reader. This document includes information and commentary concerning financial markets that were developed at a particular point in time. This information and commentary are subject to change at any time, without notice, and without update. This commentary may also include forward-looking statements concerning anticipated results, circumstances, and expectations regarding future events. Forward-looking statements require assumptions to be made and are, therefore, subject to inherent risks and uncertainties. There is a significant risk that predictions and other forward-looking statements will not prove to be accurate. Investing involves risk. Equity markets are volatile and will increase and decrease in response to economic, political, regulatory and other developments. Investments in foreign securities involve certain risks that differ from the risks of investing in domestic securities. Adverse political, economic, social or other conditions in a foreign country may make the stocks of that country difficult or impossible to sell. It is more difficult to obtain reliable information about some foreign securities. The costs of investing in some foreign markets may be higher than investing in domestic markets. Investments in foreign securities are also subject to currency fluctuations. The risks and potential rewards are usually greater for small companies and companies located in emerging markets. Bond markets and fixed-income securities are sensitive to interest rate movements. Inflation, credit and default risks are also associated with fixed-income securities. Diversification may not protect against market risk, and loss of principal may result. This commentary is provided for educational purposes only. It is not offered as investment advice and does not account for individual investment objectives, risk tolerance, financial situation or the timing of any transaction in any specific security or asset class. Certain information contained in this document has been obtained from external parties, which we believe to be reliable; however, we cannot guarantee its accuracy. These sources include Bloomberg, Bank of Canada and National Bank Independent Network for the relevant periods cited in this commentary.
GPI is a wholly owned subsidiary of Guardian Capital Group Limited, a publicly traded firm listed on the Toronto Stock Exchange. GPI operates as Guardian Capital Advisors and Guardian Partners. All trademarks, registered and unregistered, are owned by Guardian Capital Group Limited and are used under license.
Published: November 3, 2025