A Divided Stock Market Looks Scary. It Could Be the Setup for a Serious Rally.

Originally published by Barron's

A yawning gap has opened up inside the stock market that to some looks like an abyss. We see an opportunity.

On the surface, the stock market is doing just fine. The S&P 500 index ended September with a loss of just 0.5%, and is less than 1% below the record high it set in August. That’s certainly better than might be expected, given that the Federal Reserve has started raising interest rates, the 10-year Treasury yield just hit its highest level since 2002, and the Iran war continues with no end in sight, giving a boost to energy prices. Meanwhile, there are still lingering questions about the artificial-intelligence trade, from the fundamental—how will Anthropic and OpenAI turn a profit?—to the existential—will artificial intelligence mean the end of humankind?

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