Markets are looking a bit disturbing, according to corporate America powerhouse Mellody Hobson.
"It's worrisome when you start to read articles that say the whole market will go the way of one IPO, specifically Anthropic," Hobson, the co-CEO of Ariel Investments, said at the end of October when asked about her assessment of the markets at the moment.
"That feels a little single-minded … when you consider a market of thousands of stocks of different industries and the like. So, it shows how many chips are in the middle of the table on this one trade. And we are not traders; we're investors at Ariel. So it goes against all of our natural inclinations."
Hobson has established herself as one of the most influential figures in corporate finance, rising from a summer intern to co-CEO and president of value-oriented Ariel Investments alongside founder John Rogers.
She is the former chair of coffee giant Starbucks (SBUX), continues to serve on the board of JPMorgan Chase (JPM), and is a minority owner in the NFL's Denver Broncos.
Her decades of investing experience — rooted in finding out-of-favor stocks with big upside potential — are being put to the test right now.
Market volatility has spiked in recent weeks due to the midterm elections; high-stakes Big Tech earnings prints, with mixed reports and heavy capital expenditure outlays; and the removal of Nvidia CEO Jensen Huang, triggering a sharp sell-off in hot sectors.
At the same time, macro headwinds have intensified as crude oil prices remain elevated amid geopolitical friction in the Middle East, reigniting fears of sticky headline inflation and keeping long-duration Treasury yields pinned near multiyear highs.
"It feels very 1999, you know, partying like we're in 1999 again, where it was that same dot-com conversation," Hobson explained. "I think the reason that it's gotten frothy from our perspective is you have a lot of people chasing the same things. You also have this willingness to have this level of investment with no clear understanding of the payoff."
"We've seen fits and starts on that," Hobson continued. "So there are times the market says it's going to work out again; that feels a little dot-com. And then there are other times that the market says, well, wait a minute, we're spending billions and billions, trillions of dollars, but we don't know what it means in profits.
And so it's been very herky-jerky in that regard. … And then you've got this circular financing squad where they're investing in each other. That's a little scary."
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