Stocks at all-time highs. Should you invest?

What happened?

US stocks have recently reached new all-time highs.

In this episode of the Beansprout Podcast recorded at MooFest 2025, I sit down with JPMorgan Asset Management’s US Equity Investment Specialist Christian Mariani to discuss where opportunities lie.

We discussed the US Federal Reserve interest rate direction, and if artificial intelligence (AI) can continue to be a driver of market upside. 

Christian also how option strategies like covered calls can enhance income in volatile markets, as well as timeless lessons for investors. 

Catch the full conversation in the video below.

Interview with US Equity Investment Specialist at JP Morgan Asset Management: Stocks at all-time highs. Where are the opportunities? 

02:54 –  US Markets – Resilient Fundamentals but Risks Ahead

Despite US markets rebounding to all-time highs after tariff-driven volatility, JPMorgan’s Christian Mariani highlights strong corporate earnings and AI-led growth while cautioning that high valuations and policy uncertainty may fuel further swings ahead.

• The US stock market staged a sharp recovery in 1H 2025, rebounding to record highs after tariff-related sell-offs earlier in the year.
• Few expected such a rapid rebound, underscoring the resilience of investor sentiment and corporate earnings momentum.
• On the macro front, uncertainty persists around US trade and fiscal policies under President Trump, which could continue to weigh on investor confidence.
• Corporate fundamentals remain healthy, particularly in technology and AI-related sectors, with earnings growth holding up well.
• Risks ahead include stretched valuations, potential slowing in US economic growth, and margin pressure from tariffs.
• While near-term fundamentals look solid, investors should brace for volatility over the coming quarters.

05:28 – What to Watch in 2H 2025 – Earnings, Policy Shifts, and the AI Growth Story

As markets head into the second half of 2025, JPMorgan’s Christian Mariani stresses the importance of corporate earnings to justify high valuations, potential fiscal policy support under Trump, and AI as a long-term secular growth driver despite short-term bumps.

• Corporate earnings will be the key determinant of market direction, especially given elevated valuations that require delivery on growth expectations.
• AI remains a secular investment theme beyond 2025, with continued capital expenditure by major tech companies despite concerns over near-term returns.
• The AI adoption curve will likely progress in phases, from digital AI solutions in the near term to more advanced applications like robotics over time.
• As with past innovations such as the internet, investors should expect periods of hype, setbacks, and consolidation before AI’s long-term benefits are realized.
• Overall, patience and a long-term perspective are essential as markets balance short-term volatility with structural growth themes like AI.

07:50 – Understanding Digital vs Physical AI and the Global Innovation Landscape

Christian Mariani explains how AI adoption spans digital and physical applications, extending beyond tech into every industry, while global competition from emerging markets underscore that innovation is increasingly borderless.

• Digital AI refers to applications in software and services, such as enterprise cost reduction tools, large language models, and AI-powered consumer solutions like virtual travel agents.
• Physical AI encompasses industrial applications, notably robotics and AI-powered machines, which could transform sectors like manufacturing and logistics.
• While semiconductors have dominated AI discussions so far, investors should also watch opportunities in software and industrial companies as adoption deepens.
• AI is not confined to the technology sector. Its influence will spread across industries including finance, healthcare, and industrials, similar to past waves of technological adoption.
• The rise of Chinese AI firms like DeepSeek highlights how innovation can come from multiple regions, creating volatility in US tech stocks but also driving global progress.
• Rather than a threat, global competition in AI is viewed as a sign of broader innovation that can benefit economies worldwide.

10:50 – Interest Rates, Income Opportunities, and the Role of Equity Strategies

With limited scope for Fed rate cuts and low dividend yields in US equities, investors may need to explore option-based strategies that benefit from volatility as an alternative source of income.

• The Fed is expected to deliver at most one or two rate cuts in 2025, as it balances supporting economic growth with inflation pressures linked to tariffs.
• Interest rates have drifted lower but remain volatile, making it harder for investors to rely on traditional fixed income instruments for steady income.
• Dividend yields from large US companies are generally low, with the S&P 500 averaging around 1.5 percent, leaving limited scope for meaningful equity income.
• Active equity portfolios combined with option overlays can enhance income generation, particularly in volatile market conditions.
• Selling options on top of equity positions can provide investors with a more diversified income stream that is less dependent on interest rate movements.
• Elevated market uncertainty and sustained volatility may make such option-based strategies more attractive for income-seeking investors in the year ahead.

13:30 – Understanding Covered Calls and How Investors Can Access Them

Covered calls allow investors to generate income by selling options on stocks they already own, though the strategy trades some potential upside for steadier returns and can now be accessed more easily through structured products and platforms.

• A covered call involves owning a stock or equity portfolio while selling a call option on it, with the option premium received serving as income.
• The strategy benefits from higher market volatility, since option prices and premiums rise when volatility increases.
• Selling calls can reduce overall portfolio risk by lowering beta and volatility, while still generating steady income.
• The trade-off is that investors may give up some potential upside if markets rally strongly beyond the option strike price.
• For those unable to execute such strategies directly, there are packaged investment products and platforms that provide access to covered call strategies across US and global markets.
• As with any options-based strategy, investors need to build sufficient knowledge and understanding before incorporating it into their portfolios.

16:11 – The Importance of Psychology and Calm Decision-Making in Investing

Christian Mariani highlights the value of financial education, citing Charlie Munger’s Poor Charlie’s Almanac, and stresses that staying calm and avoiding overreaction is key to long-term investment success.

• Financial education is essential for investors, and one highly recommended resource is Poor Charlie’s Almanac, which blends biography, psychology, and practical investing lessons.
• The book is praised for being approachable, offering both life wisdom and insights into the psychology of investing without being overly technical.
• Controlling emotions is critical, as fear and panic often drive poor investment decisions.
• Mariani’s key psychological rule is simple but powerful: do not overreact to short-term market moves.
• Investors who exited markets during tariff-driven sell-offs earlier in the year would have missed the subsequent sharp rebound, underscoring the cost of emotional decisions.
• A calm, long-term perspective helps investors navigate volatility without making hasty mistakes that can undermine returns.

17:45 – Key Investing Lessons to Remember

Christian Mariani’s parting advice emphasises the importance of research, diversification, and openness to new strategies for long-term investing success.

• Always do your own research and take time to understand the market before making investment decisions.
• Stay open-minded and avoid concentrating only on one theme, industry, or region; diversification across markets and asset classes is essential.
• Continuous learning and exploring new strategies, such as option-based income approaches, can enhance long-term investing outcomes.

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