Investors urged to “exercise discipline” amid market excitement

Investors have been cautioned against getting swept up by the hype surrounding record-breaking global stock market performance fuelled by stronger-than-expected corporate earnings and interest rate hopes, despite rocky conditions.

The chief executive of global financial advisory firm deVere Group, Nigel Green, said while “liquidity is plentiful” and technology stocks in particular continue to over-perform investors should consider US inflation remains at its highest point since January (three per cent) and fresh tariff impacts are already putting pressure on global supply chains.

“The MSCI All Country World Index, the S&P 500, Japan’s Nikkei 225 and South Korea’s Kospi have all recently hit new heights,” he said.

“These are extraordinary milestones, but they are also flashing caution signals. Whenever prices outpace the real economy, risk is rising even when sentiment suggests otherwise.

“Markets are pricing in perfection: cheaper money, steady growth and permanently rising profits. History teaches us that kind of assumption rarely ends well.

“Oracle added more than $240 billion in market value in a single session after an AI forecast. Genuine innovation is happening, but investors appear willing to pay almost any price for the mere promise of leadership.

“When a narrow group drives global index performance, portfolios are exposed to sudden disappointment—whether from earnings misses, regulatory action or a shift in monetary policy.

“History shows that when just a few companies carry the market, volatility eventually follows.”

Green said the global conditions underpinning such strong market performance stand on shaky ground, combining slow economic growth, yet-to-be-felt impacts of new US tariffs and a US dollar susceptible to potentially worsening trade tensions.

This forms the basis for Green’s warning to investors to “resist momentum”, “review portfolios with an unsentimental eye” and diversify “deliberately” across regions and asset classes to properly mitigate the impacts of heavy US exposure, with alternatives such as infrastructure and private credit singled out as “shock absorbers”.

“Any sign of hawkishness or a fresh escalation in trade tensions could send the dollar sharply higher, tightening financial conditions and putting pressure on emerging markets,” he said.

“For globally mobile investors, active currency management isn’t optional—it’s central to long-term capital preservation. Liquidity is an offensive as well as a defensive tool.

“Extraordinary highs demand extraordinary discipline. It’s tempting to believe central banks will underwrite asset prices indefinitely or that tech innovation will justify any valuation. Such assumptions are rarely rewarded.

“Global growth is not collapsing, many leading companies have significantly robust balance sheets, and there are genuine opportunities for patient capital.

“But optimism must be balanced with realism. Markets can certainly climb higher, yet that is not a reason to relax risk management. On the contrary, buoyant prices are the moment to prepare carefully for the future.”

“Capital preservation is the first duty and compounding a close second. This rally offers the chance to secure both, provided investors maintain clarity of purpose and refuse the easy narrative that rising prices mean falling risk.”