These 3 Big Risks Could Cause the Next Bear Market. I'm Investing Anyway.

Three significant risks could potentially trigger the next bear market, despite the allure of investing. First, the rapid growth of artificial intelligence (AI) in the U.S. stock market could face a slowdown, as capital expenditures for AI hyperscalers have reached a staggering $800 billion since the year's beginning. Second, the Federal Reserve's interest rate hikes and the resulting spike in longer-term interest rates, such as the 10-year Treasury yield, may slow the economy and make stocks less attractive to investors, especially in the short term.

Lastly, the stock market's current valuation, as measured by the cyclically adjusted price-to-earnings (CAPE) ratio, suggests it is richly priced compared to historical averages, which could lead to a potential market correction. Despite these risks, the author remains committed to investing, citing the stock market's historical average annual returns of 9.98% since 1928 and an impressive 13.8% over the past five years, even during a significant bear market in 2022.