This article was first published in the Globe and Mail on June 21, 2025. It is being republished with permission.

by Tom Bradley

There are a lot of unsettling things going on right now, and it’s not limited to politics and foreign affairs. The investment world has its share of curious developments. On their own, they may not be unprecedented or troubling, but in aggregate, well, it’s not normal out there. The tenets of investing, as I know them, are being stretched or obliterated. Here’s a few examples.

The next Kodak

A long list of iconic growth companies are hitting the wall. I’m not talking about their stock prices being down because sales failed to meet analyst expectations. No, in many cases sales are down in absolute terms, sometimes by a lot, without a recession to blame. These bluer-than-blue chip companies have gone no growth and may even be turnaround stories.

I’m talking about Nike, Starbucks, McDonald's, Pepsi, Lululemon, luxury brands like LVMH, booze stocks such as Diageo, luxury car manufacturers including Tesla, and yes, Apple.

The reasons are different in each case but in part trace back to the fact that the growth engines of the world economy – declining interest rates; deficit spending; globalization; and emergence of the Chinese consumer – are losing power. Tailwinds have swung around to become headwinds. These companies are unlikely to be the next Kodak but are certainly looking at tougher years ahead.

Untethered optimism

At the same time, there’s an inordinate amount of attention and money going toward assets that have no cash flow and/or are hard to value. Assets where investors’ optimism isn’t constrained by fundamental measures such as year over year sales, profit margins and price-to-earnings ratios.

Gold and bitcoin are playing a bigger part in portfolios. Both provide diversification, but neither generates a profit nor has a clear business purpose.

Private equity funds are also getting an increased allocation. They own real businesses but many of their holdings are getting ripe on the vine and need to be divested. This backlog, combined with a sticky market for initial public offerings, means funds are trading more among themselves at prices outside of investors’ purview.

And certainly, financial metrics aren’t curbing optimism for anything related to artificial intelligence. Hope and hype are years ahead of any concrete economic assessment.

To be clear, artificial intelligence’s impact is not in doubt, but there are many unanswered questions. How will it be monetized? Will it generate net new revenue or simply be a competitive differentiator needed to justify current revenue? Can capital costs and power requirements be reined in? Can power grids keep up? How does the environmental impact get factored in? And is AI moving tech companies from being capital light to capital intensive?

Sizzle without the steak

Speaking of hype, the crypto world has a product that’s exploding in popularity – stablecoins.

These tokens make it easier to transact and transfer money on blockchain, but there’s a catch. No income. When coins are minted, the proceeds are invested in securities like U.S. Treasury bills (i.e. stable assets) but the interest is kept by the coin sponsor.

For individual investors, stablecoins are the digital equivalent of putting money under the mattress. They make low-interest bank accounts look like a bargain. For issuers, stablecoins are one of the most profitable investment products ever, which explains why corporations are lining up to issue their own versions.

Betting the farm

Related to cryptocurrency, the latest corporate strategy is to turn operating businesses into bitcoin proxies. Companies that have limited prospects can break out of their rut by filling the corporate coffers with bitcoin and telling the world about it.

Strategy, formerly an enterprise software company known as MicroStrategy, is the poster child for this trend. It has raised almost $30 billion via stock and debt issues to buy bitcoin, which has more than tripled over the last two years.

Strategy shareholders have done well and there’s now a slew of copycats that have shelved their business plans (formerly know as strategy) and are betting their companies on a volatile digital asset.

Most of these things I’ve listed, while fascinating, are playing out at the fringes of the capital markets. They indicate we’re in a period of above-average risk taking, but I expect they’ll have little or no impact on the long-term returns of well-diversified portfolios.

As for businesses, they are remarkably adaptable. For those that offer products and services that people need, markets are there, and economic principles still apply.