Sonali Basak: Building “The Bridge” Investors Can Walk Across

Artificial intelligence dominates current market sentiment, with capital allocation shifting toward hyperscalers and infrastructure projects despite concerns over unsustainable spending and systemic leverage risks. While Jevons paradox explains how declining token costs drive aggregate demand, the resulting massive capital expenditure across the AI food chain creates a precarious environment. Traditional diversification strategies, such as infrastructure funds, are increasingly tethered to the AI build-out, leaving investors with fewer defensive options. Financial institutions are capitalizing on this trend through structured products and debt financing, yet the reliance on leverage mirrors historical market bubbles. Meanwhile, global economic headwinds, including elevated oil prices and the unwinding of the Japanese yen carry trade, threaten to tighten liquidity. As market valuations reach extremes, a return to fundamental value investing and rigorous risk management becomes essential for navigating current volatility and avoiding the pitfalls of momentum-driven trading.