Global tech stocks spent this week doing their finest impression of a soufflé. They rose, they collapsed, and then, once a few trillion dollars had vanished and reappeared, they rose again. The official explanation is that investors feared the midterm results would bring tougher rules on artificial intelligence and closer scrutiny of the data centres that run it. Put plainly, markets sold shares because they worried someone might eventually ask the machines some questions.
Here is the performance. A share price is supposed to reflect what a company’s future profits might be worth. But when a tech giant loses billions on the strength of a regulatory hearing that has not happened yet, the market stops being a calculator and becomes a stage production. Everyone is reacting to the same rumour, nobody has read the actual proposals, and the audience is applauding its own gasp.
So what does this mean for you? If your pension or index fund dipped and recovered within days, you did nothing to cause it and nothing was required of you. The people who checked their accounts twice a year, as sensible savers do, were spared the entire drama. The rest were treated to a week of very expensive theatre, with the bill for admission paid in advance.