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<ul class="summary-list"><li>Saudi Arabia has invested billions of dollars into tech overseas in recent years.</li><li>The kingdom is now looking for overseas tech companies to invest in it, according to Bloomberg. </li></ul>In his ascendance to power, <a target="_blank" class="" href="https://www.businessinsider.com/saudi-arabia-crown-prince-mohammed-bin-salman-mbs-2023-10">Mohammed bin Salman</a> spent years investing Saudi Arabia's oil money in the global tech sector. The crown prince's kingdom appears to be ready for some of that favor to be returned.Rather than prioritizing investments in overseas tech companies, Saudi Arabia is looking to them to bring investment and resources to the Middle East as it seeks to capitalize on the AI boom and become a force of its own in the rapidly growing sector.The latest signs of this shift came on Wednesday after <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-11-06/saudis-plan-100-billion-ai-powerhouse-to-rival-uae-s-tech-hub">Bloomberg reported</a> that Saudi Arabia had plans for an up to $100 billion AI project that aims to not only prioritize the local tech industry but also encourage large tech companies to "put resources in the country.""Project Transcendence," as it is known, aims to make Saudi Arabia a place with all the components needed to advance AI: data centers housing the GPUs that train and run AI models, well-resourced startups at the cutting edge of innovation, and a globally sourced talent pool. According to the Bloomberg report, it also aims to build a "national champion" in AI. The crown prince, known as MBS, <a target="_blank" class="" href="https://ai.sa/">initiated a national AI strategy in 2020,</a> well before the current boom. But several factors have emerged since then for his nation to think hard about what it can do to accelerate the development of a resilient AI industry at home — and who it can get some help from.<div type="image" title="MBS" height="3043" width="4300" msid="115061833" hostid="261" sizebytes="382254"></div>One reason is that there has been an investment step-up in AI since the <a target="_blank" class="" href="https://www.businessinsider.com/everything-you-need-to-know-about-chat-gpt-2023-1">launch of ChatGPT</a> in late 2022, raising the stakes for Saudi Arabia as it battles neighboring rivals like the UAE for regional supremacy. Emirati state Abu Dhabi, for instance, is home to G42, a domestic company with an advanced <a target="_blank" href="https://www.g42.ai/resources/news/meet-jais-worlds-most-advanced-arabic-llm-open-sourced-g42s-inception">Arabic large language model</a>. It has also attracted $1.5 billion of investment from Microsoft. Bloomberg's report said Saudi Arabia planned to build its own version of G42.Another reason is weakening oil demand, a resource that has made the kingdom the central economic force of the Middle East for the better part of a century.An <a target="_blank" href="https://www.imf.org/en/Publications/CR/Issues/2024/09/03/Saudi-Arabia-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-Informational-Annex-554530">IMF report in September</a> highlighted the ongoing decline in the country's oil revenue as the calendar speeds through to 2030; a decade-high of 857 billion riyals in 2022 ($228 billion) is projected to fall to 778 billion riyals ($207.1 billion) by 2029. Signs of weakening demand showed themselves this week, too, as state-owned oil giant <a target="_blank" href="https://www.aramco.com/-/media/publications/corporate-reports/reports-and-presentations/2024/q3/saudi-aramco-q3-2024-interim-report-english.pdf">Saudi Aramco reported a 15.3% year-on-year decrease</a> in third-quarter net income from $32.6 billion to $27.6 billion.Diversification away from oil has been a front-and-center issue for the kingdom's leaders for some time. It is a central focus of the <a target="_blank" class="" href="https://www.businessinsider.com/saudi-arabia-vision-2030-projects-trillion-value-neom-2024-9">grand Vision 2030 project MBS launched in 2016</a>, which includes mega-infrastructure projects like Neom. It is also a top priority for decision-makers at the Public Investment Fund, Saudi Arabia's giant sovereign wealth fund.The fund — chaired by MBS — has served as a crucial diversification tool for Saudi Arabia, <a target="_blank" class="" href="https://www.businessinsider.com/saudi-arabia-public-investment-fund-global-investment-spree-2024-8">leading an investment charge into top tech names</a> like Uber and SoftBank's first Vision Fund, a venture capital vehicle that bet on over 90 companies with $45 billion from the Saudis. The kingdom doesn't seem to want to keep up the pace of overseas spending it has previously had, however.Last month, PIF governor Yasir Al-Rumayyan told attendees of the Future Investment Initiative in Riyadh that the fund was preparing to allocate just 18 to 20% of its capital to overseas opportunities, <a target="_blank" href="https://www.ft.com/content/5004fbc6-23e2-4b9f-9885-14e1ea724ce2">the Financial Times reported</a>. That's a notable drop from the 30% allocated at the start of the decade.Overseas investment in AI looks set to continue, though. In March, The New York Times reported that the PIF was in early talks with Silicon Valley venture capital firm Andreessen Horowitz for a <a target="_blank" class="" href="https://www.nytimes.com/2024/03/19/business/saudi-arabia-investment-artificial-intelligence.html">$40 billion AI fund.</a> Should that materialize, it would be a significant force in the global AI investment space. <div type="image" title="Yasir al-Rumayyan" height="852" width="1093" msid="115061832" hostid="261" sizebytes="47602"></div>It remains to be seen how Project Transcendence might play out, but it could lead to Saudi Arabia announcing new developments, companies, and projects alongside key names from beyond its borders to bolster its AI activity at home.There are already examples of the country turning to overseas tech companies. California-based AI company Groq, for instance, <a target="_blank" href="https://groq.com/unleashing-the-power-of-fast-ai-inference-groq-and-aramco-digital-partner-to-establish-world-leading-data-center/">unveiled a partnership</a> with an arm of Saudi Aramco in September that will oversee the development of an AI data center in the country. In October, Google Cloud and the PIF announced a partnership to develop an AI hub in the kingdom that, if approved, would see the two conduct joint research on Arabic language models and train "millions" of students and professionals.Saudi Arabia will want others to work with it, too, as it gets serious about becoming the Middle East's main stage for AI.

Saudi Arabia spent years investing in global tech firms. Its domestic AI push hopes they'll return the favor.

<ul class="summary-list"><li>Billionaire investor Bill Gross says the stock market's record-breaking run is set to slow.</li><li>He recommends that investors reposition toward defensive and high-yielding stocks.</li></ul>Though this year's record-beating stock rally <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-goldman-sachs-boosts-sp500-price-target-again-2024-10#:~:text=Goldman%20Sachs%20raised%20its%20S%26P,trends%20should%20boost%20earnings%20growth.">continues to impress</a> Wall Street, billionaire investor Bill Gross isn't so sure the bull market will maintain its hot pace for much longer.According to the so-called Bond King's latest <a target="_blank" href="https://williamhgross.com/investment-outlook-archive/">note</a>, investors should reposition toward defensive and higher-yielding stocks as momentum winds down. He also recommended low exposure to fixed income, having previously <a target="_blank" href="https://markets.businessinsider.com/news/bonds/bond-yeidls-bill-gross-rising-treasury-issuance-government-debt-deficits-2024-5">criticized current Treasury conditions.</a>"No bear market, but it's not the same bull market anymore," Gross said, adding that equities are set for "low buy positive" returns going forward.Gross also listed four of his favorite investments at present time:The first is <a target="_blank" href="https://markets.businessinsider.com/stocks/ale-stock">Allete</a>, an electric-service company that has risen 5% year-to-date. It's a buyout with 10% upside over the next 12 months, he said.Gross also touted multiple limited partnership pipelines, an investment he frequently emphasizes as a fruitful alternative to bonds. He cited that MLPs offer 8% tax-deferred yields. <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/bill-gross-investing-strategy-oil-gas-piplines-limited-partnerships-ai-2024-5">Back in May</a> he said that MLPs had been "almost as good as AI."On the theme of Treasury alternatives, Gross also cited <a target="_blank" href="https://markets.businessinsider.com/stocks/nly-stock">Annaly Capital Management</a>, a high-yielding mortgage REIT.He also sees <a target="_blank" href="https://markets.businessinsider.com/news/bonds/municipal-bonds-muni-recession-outlook-sahm-yield-curve-charles-schwab-2024-8">municipal income</a> funds as a worthwhile investment, as many have offered over 7% tax-free yields. Gross named the DWS Municipal Income Trust as one example but noted that there are between 20 and 30 others to choose from."7% may not last forever, but for now these funds trade at 6-8%," he said.Gross isn't going as far as to predict that the stock bull run is about to crash, only that a number of headwinds are around the corner. These range from extended valuations to an assortment of macroeconomic and geopolitical headwinds.Gross specifically cited higher corporate taxes under a Kamala Harris presidency, as well as stunted growth if military tensions keep escalating globally. Rising deficits — an issue the investor has <a target="_blank" href="https://markets.businessinsider.com/news/bonds/bill-gross-us-debt-crisis-deficit-inflation-federal-reserve-default-2024-2">repetitively warned against</a> — will eventually slow down spending.Gross also referred to the record cash pile held by legendary investor Warren Buffett, which some see as a <a target="_blank" href="https://markets.businessinsider.com/news/stocks/warren-buffett-record-cash-pile-stock-market-crash-signal-berkshire-2024-5">sign that the market could soon sell off sharply</a>. To Gross, it at least signals a "bumpy road ahead."His note also cited some positives to counter the listed headwinds, such as falling inflation and continued investment in artificial intelligence.

Billionaire 'Bond King' Bill Gross recommends 4 defensive investments for a bull market he sees losing steam

<ul class="summary-list"><li>John Hussman warns of poor S&amp;P 500 returns over the next 12 years.</li><li>High valuations suggest potential underperformance against Treasurys.</li></ul>Before investing in the stock market, <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-crash-bubble-sp500-outlook-valuations-1929-2000-hussman-2024-9">John Hussman</a> urges investors to keep in mind that return outcomes ultimately have different probabilities based on when you buy in.While the <a target="_blank" href="https://www.businessinsider.com/personal-finance/investing/average-stock-market-return#:~:text=The%20S%26P%20500%20has%20returned,bonds%20or%20fixed%2Dincome%20assets.">S&amp;P 500 has averaged 10.5% annual returns</a> since 1957, that doesn't mean those are the average returns you'll get no matter when you enter the market."This is like stepping into a house with two rooms, one with the temperature at 0 degrees and one at 140 degrees, and expecting a temperature of 70 either way," said Hussman, the president of the Hussman Investment Trust who called the 2000 and 2008 crashes, in an October 17 note.Case in point, if you bought in on February 14, 2020, you'd be up 71%. But if you bought in just over a month later, at the bottom of the pandemic-driven crash on March 20, you'd be up 152% right now. They're both great outcomes, no doubt. But they're very different. And in business cycles where monetary and fiscal stimulus aren't as robust, the market can take a much longer time to recover.Right now, a few different variables show that investors should expect poor outcomes over the next 12 years if they were to invest in the S&amp;P 500 today, Hussman said.First, there are valuation levels. Hussman's go-to measure is the market cap of non-financial stocks divided by those stocks' total gross value added. The metric is at all-time highs, surpassing the largest bubble peaks in history.<div type="image" title="stock valuations" height="520" width="909" msid="114619204" hostid="261" sizebytes="35468"></div>Hussman likes it so much because it's been a fairly good predictor of 12-year market returns relative to 10-year Treasury returns. Here's the relationship between expectations and actual market returns. Current expectations have the S&amp;P 500 underperforming Treasurys by 9.9% annually over the next 12 years.<div type="image" title="expected vs actual market returns" height="526" width="911" msid="114619196" hostid="261" sizebytes="49876"></div>Then there's investor sentiment, which Hussman measures through the uniformity of movement in thousands of securities. In the chart below, when the measure goes flat like in 2000 and 2008, it's historically been bad for stocks.<div type="image" title="hussman market internals" height="522" width="915" msid="114619200" hostid="261" sizebytes="40814"></div>Finally, there's the accumulation of warning signs of market over-extension that rivals prior major downturn periods. The individual warning signs that Hussman monitors are various technical indicators, like the S&amp;P 500 being within 2% of its 5-year high while less than 72% of stocks are below their 200-day moving averages and 2.5% of stocks hit new both 52-week highs and lows at the same time, among other conflicting signals.<div type="image" title="hussman market over-extension signals" height="523" width="906" msid="114619202" hostid="261" sizebytes="38850"></div><h2 id="d60fe598-14e2-4ac5-a790-8f742704fa81" class="premium">Hussman's track record — and his views in context</h2>Hussman's outlook is often seen as extreme, and perhaps fairly so. But valuations are causing skepticism about future market returns among others on Wall Street, even if not to the same degree.Earlier this week, <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-future-returns-decade-forecast-goldman-sachs-2024-10">Goldman Sachs forecast that the S&amp;P 500 would average 3% annual returns</a> over the next decade. That's less than the 4.2% annual yield that risk-free 10-year Treasurys offer.It's also worth remembering that Hussman's outlook is only for a 12-year period if you were to buy in now — not if you plan to hold for multiple decades.For the uninitiated, Hussman has repeatedly made headlines by predicting a <a target="_blank" rel="" href="https://www.businessinsider.com/stock-market-news-john-hussman-says-stocks-at-record-valuations-will-lose-two-thirds-2018-1">stock-market decline</a> exceeding 60% and forecasting a full decade of <a target="_blank" rel="" href="https://www.businessinsider.com/stock-market-news-market-bear-sees-decade-of-stock-losses-wall-street-mad-2017-11">negative equity returns</a>. And as the stock market ground mostly higher, he persisted with his doomsday calls.But before you dismiss Hussman as a wonky perma-bear, consider again his track record. Here are the arguments he's laid out:<ul><li>He predicted in March 2000 that tech stocks would plunge 83%, and then the tech-heavy Nasdaq 100 index lost an "improbably precise" 83% during a period from 2000 to 2002.</li><li>He predicted in 2000 that the S&amp;P 500 would probably see negative total returns over the following decade, which it did.</li><li>He predicted in April 2007 that the S&amp;P 500 could lose 40%, then it lost 55% in the subsequent collapse from 2007 to 2009.</li></ul>Hussman's recent returns, however, have been less than stellar. His Strategic Growth Fund is down about 55% since December 2010 and has fallen 16% in the past 12 months. The S&amp;P 500, by comparison, is up about 39% over the past year.The amount of bearish evidence being unearthed by Hussman continues to mount, and his calls over the past couple of years for a substantial sell-off began to prove accurate in 2022. Yes, there may still be returns to be realized in this new bull market, but at what point does the mounting risk of a larger crash become too unbearable?That's a question investors will have to answer themselves — and one that Hussman will keep exploring in the interim.

A notorious market bear who called the 2000 and 2008 crashes shares 3 signs it's a terrible time to invest in the S&P 500 — and warns stocks are due to underperform Treasurys by 10% over the next 12 years

<ul class="summary-list"><li>Investors boosted stocks after Donald Trump won a second term.</li><li>But investors shouldn't depart from their long-term investing plan, Morningstar's Dave Sekera says.</li></ul>Investors had a field day on Wednesday, <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/trump-election-win-stock-market-today-record-high-sp500-dow-2024-11">plowing money into the stock market</a> following the news that former president Donald Trump had won a second term. The S&amp;P 500 rose 2.5%, while the Dow Jones Industrial Average ended the day up a whopping 3.5%.But even as prices soar, it's important not to get caught up in the mania beyond your normal risk tolerance, warns Morningstar Senior US Market Strategist Dave Sekera."Don't let any of these dire headlines that you may see here in the short term dissuade you from your long-term investment objectives," Sekera said in a webinar on Wednesday morning."Based on your risk tolerance, I probably wouldn't be making any changes here today," he continued. "And when you do make changes, make sure that you're only making changes when there's really a change in your underlying fundamentals and only make changes in your portfolio based on an informed analysis."While not letting near-term developments derail your plan for your portfolio is classic advice, Sekera said there's another reason to be extra cautious: stock valuations are at some of their most expensive levels in the last decade-and-a-half."When I look at the market today, it is trading, with today's bump, probably a 3% to 4% premium above fair value," he said. "Now, a lot of investors may say, 'Eh, 3% to 4% doesn't sound like that much from a market point of view,' but when I look at our valuations going back to 2010, less than 20% of the time have we seen the market trade at this much of a premium or more."While Morningstar has its own proprietary valuation measures, common metrics show the S&amp;P 500 is indeed expensive. Below is the Shiller cyclically-adjusted price-to-earnings ratio, for example. It's a 10-year rolling average of the market's trailing 12-month PE ratio.<div type="image" title="shiller cape ratio" height="943" width="1242" msid="115062287" hostid="261" sizebytes="44672"></div>These valuation levels have prompted some <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-crash-why-sp500-decade-weak-returns-goldman-jpmorgan-2024-11">top investment banks</a>, including Goldman Sachs, to warn of relatively poor returns in the coming decade.At the same time, investors are probably right to be excited about the prospect of lower taxes and regulation, Sekera said. Even what some investors may view as negatives, like tariffs and the potential inflation that could result from them, may end up being a boon for stocks, he said."From the stock point of view, for those companies that have pricing power, that actually could end up helping them generate some additional earnings growth," he said.If Republicans end up taking a majority in the House of Representatives alongside their victory in the Senate and the White House, bullishness around more tax cuts may especially be well founded, according to Sekera.Still, markets are unpredictable, and investors shouldn't overreact to events like elections, as there are many variables at play beyond who is in political power — like starting valuations. Sekera pointed to a recent article from his colleague John Rekenthaler, where he highlighted that oil stocks have done much better under President Joe Biden than they did during Trump's first term, despite their differing attitudes toward the fossil fuel industry.That's again why Sekera is urging restraint, with the market being expensive. That is particularly true for growth stocks, which trade at a "very large premium," he said.Value stocks and small-caps are where Sekera sees the most opportunity — especially in the latter."The small-cap space, even with today's bump, it's still the most undervalued part of the market in our view," he said.

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Saudi Arabia spent years investing in global tech firms. Its domestic AI push hopes they'll return the favor.

Hasan Chowdhury

Billionaire 'Bond King' Bill Gross recommends 4 defensive investments for a bull market he sees losing steam

Filip De Mott

A notorious market bear who called the 2000 and 2008 crashes shares 3 signs it's a terrible time to invest in the S&P 500 — and warns stocks are due to underperform Treasurys by 10% over the next 12 years

William Edwards

Why you shouldn't get caught up in the post-election stock-market frenzy: Morningstar

William Edwards

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