Dan Niles, who started Niles Investment Management, says that cash is the best investment right now because the markets may peak after the Fed meeting. He says that because of AI volatility and possible pauses in rate cuts, it’s important to be strategic and diversify.
Cash gives you a safe 4% yield through money market funds and gives you “dry powder” for when things get tough. Niles says this is smart because there are risks of inflation and no more Fed cuts are expected until a new chair takes over in May. The markets are pricing in an 89% chance of a rate cut on December 10, which could be a peak, making cash a safe bet.
Niles thinks Alphabet (Google) will be the leader in AI, setting it apart from OpenAI ecosystem players who know that only a few will succeed. He is interested in Apple’s stock because of the new AI-enabled products and foldable phones that will be released next year. The new Alphabet Gemini 3 model and custom chip give it an edge in AI trading that changes quickly.
Stay diversified even when AI is getting a lot of attention. Fed rate cuts have helped stocks go up, but high valuations limit their potential for growth. Niles thinks Microsoft shares are weak because they fell on rumors about AI sales targets, which were proven false. Be ready for changes of 10% to 20% because of inflation and Trump’s policies.
