Exuberance, Electricity, and the Edge of Reason
Standing on a dusty patch of land in Abilene, Texas, Sam Altman laid out a vision unlike anything we’ve seen in the history of the internet: a 17-gigawatt data center buildout, the equivalent of 17 nuclear plants or nine Hoover Dams. It’s a project so vast it borders on surreal.
Just days earlier, in Providence, Federal Reserve Chair Jerome Powell acknowledged that stock prices look “fairly highly valued.” Two very different leaders: one shaping the future of AI, the other stewarding U.S. monetary policy, both hinting at the same truth: we’re living in extraordinary times. And yet, markets continue to climb.
We’ve been here before.
The lesson is timeless: timing is impossible, but excess always meets a reckoning.
The Present Tension
Altman was candid in Texas: “Smart people will get overexcited, and people will lose a lot of money. People will make a lot of money.”
Powell was candid in Providence: “Equity prices are fairly highly valued.”
And the data is candid too.
This is not about day-to-day noise. It’s about probabilities, cycles, and history rhyming.
Yet… stocks still push higher.
That’s the paradox of markets:
Which begs the question: if valuations are stretched, policy is politicized, and AI infrastructure spending is at unprecedented levels, where do investors look for real opportunity?
History Rhymes: Small Caps After Rate Cuts
One answer may lie in the overlooked corners of the market.
According to Nasdaq Dorsey Wright, when the Federal Reserve has cut interest rates spaced more than 100 days apart since 1990, small-cap equities (represented by the iShares Russell 2000 ETF, IWM) have delivered standout forward returns:
In other words, while mega-cap AI names dominate headlines and valuations stretch historic extremes, history shows small caps often thrive in the second act of easing cycles.
This doesn’t mean the ride will be smooth. Small caps can be volatile, cyclical, and sensitive to economic shocks. But for investors aiming to diversify beyond the S&P 500, they may offer exposure to the next phase of the cycle rather than the most crowded trade of the present.
Members’ Wealth Takeaways
Our stance: Don’t chase exuberance. Don’t hide under a mattress either. Build resilient, adaptable portfolios that participate in growth but survive the inevitable reckoning.
Markets don’t ring a bell at the top. Altman is telling us this is extraordinary. Powell is telling us valuations are stretched. The Shiller P/E is screaming caution. And yet, markets climb.
You don’t need to time the top. You need a portfolio that endures both exuberance and correction.
📩 Let’s talk about how your portfolio is positioned across mega-cap AI, small caps, and everything in between so you’re ready for both sides of the cycle.
Schedule a conversations with us today.
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Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.
Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.
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