Top fund manager Nick Train has likened the bullish attitude of investors to that of the 1920s and the run-up to the infamous 1929 stock market crash.
Train said that he was not predicting a repeat of the disaster but his comments will be seen as the latest alert about the danger posed by soaring valuations.
It comes after warnings from the Bank of England and the International Monetary Fund, which have likened the current craze for artificial intelligence (AI) stocks to the ‘dotcom bubble’ in 2000.
The comments from Train – who has managed the Finsbury Growth & Income Trust for 25 years – draw an analogy with an even more infamous market collapse nearly a century ago.
He made the remarks when asked about investors’ approach to risk in the current market amid the rise of AI as well as cryptocurrencies, during an interview with the BBC.
Train said: ‘There’s no difference in private investors’ or indeed professional investors’ attitude to asset classes today as there was in the 1920s in the run-up to the ’29 crash.
Wall Street and global stock markets crashed in 1929
‘I’m not predicting another crash but I am saying that the sort of behaviours… those have evidenced themselves many times during the course of financial history and will do so again.’
Train said however that AI was ‘probably a transformative thing for individuals and businesses’ and ‘likely to lead to better growth and productivity gain and more wealth’.
He added: ‘There’s a very very good analogy between the internet/AI and the railroads in the nineteenth and early twentieth century as well. These transformative technologies – there are investment booms that develop around such technologies.’
