The Clark Howard Podcast: Ask An Advisor with Clark Howard & Wes Moss

Episode Date: October 28, 2025
Hosts: Clark Howard & Wes Moss

Overview

This special episode brings together personal finance veteran Clark Howard and advisor/author Wes Moss to tackle two hotly debated and often confusing topics for investors:

1. Whether the U.S. stock market is dangerously overvalued, especially in the context of the “AI boom.”
2. The entrance of private equity investment options into 401k retirement plans.

They aim to clarify their differing views and help listeners make smarter decisions amidst swirling hype and jargon.

Key Discussion Points and Insights

1. Is the Stock Market Overvalued? (01:40–25:30)

a. The “AI Bubble” and Stock Market Parallels to the Past

• Clark and Wes kick off by reflecting on listener confusion caused by their past, seemingly contradictory advice on the stock market and AI investments.
• They reference economist Mohamed El-Erian's assessment: We are in an AI-driven bubble, but a “rational bubble”—an oxymoron but a telling sign of current sentiment.
  • Quote [04:48], Wes Moss:

    “He said, yes, we're in a bubble. We're in an AI bubble…but he said, it's a rational bubble. Can you believe that? From Mohamed El Erian?”

• The duo draws comparisons with the dot-com era, recalling how companies with ever-growing losses soared in valuation until the inevitable crash. Modern AI, while profitable for some giants, may follow similar patterns for smaller players.
• Wes notes, unlike dot-com, key AI companies today are extremely profitable and reinvesting real earnings—e.g., Walmart using AI and IoT for logistics and loss prevention.
• Analogies: Webvan, pets.com (dot-com boom); today’s “MAG7” tech titans (Microsoft, Apple, Meta, Google, Amazon, Nvidia, Tesla).

b. Market Concentration and Valuations

• Wes shares alarming stat: The top 10 stocks comprise nearly 40% of the S&P 500’s value—a historical first ([13:27]).
  • Quote [13:27], Wes Moss:

    “The weight of just those 10 stocks, … is now almost 40% of the total market. That's incredible. That's never happened.”

• Standard price-to-earnings (P/E) ratios:
  • Long-term average: 17–18×
  • Today (2025): 25× overall, 20× equal-weighted ([14:35] Wes)
• Clark’s take: Market is priced for “perfection”—even equal-weighted indices are above historical averages. Dangers of sudden, unpredictable downturns and investor overconcentration.
  • Quote [16:02], Clark Howard:

    “When market declines happen, it's always out of nowhere. We don't know as we're sitting here right now, the reality is, …what meteor hits the market.”

c. Dangers of Overconcentration and Chasing Hot Sectors

• Wes criticizes “layered risk” — investors buying both the S&P 500 and then piling on sector- or specialty-tech ETFs and individual AI stocks.
  • Quote [17:08], Wes Moss:

    “What really damages investors…is when they are layering…risk upon risk. … If you were really to look under the hood, their whole portfolio is tech.”

• Clark warns: Leverage, heavy sector bets, and social media-driven FOMO can wipe out portfolios.
  • Quote [18:14], Clark Howard:

    “…I'm worried that people don't understand that…they get overextended, overextended and overweighted.”

d. Practical Advice: Diversification and Behavioral Insights

• Wes provides a key behavioral economics insight: The pain of loss outweighs the joy of gains; portfolios must be constructed to withstand inevitable corrections or bear markets ([19:33]).
• Balance: Maintain a diversified mix of stocks and “safety assets” (10–50% of portfolio, depending on risk tolerance), enabling investors to “stay the course.”
• Study referenced: Even horribly timing the market beats long-run returns of sitting in cash—it’s “participation, not perfection" that grows wealth ([21:30]).
  • Quote [22:23], Wes Moss:

    “Terrible timing still beat cash by more than four times.”

Memorable Quotes from This Segment

• [05:13] Clark Howard:

  “The more a company lost in quarterly earnings, the more their shares went up.”

• [25:13] Clark Howard:

  “People are putting themselves in danger by not following classic models of spreading out your risk. Balance, balance…”

2. Private Equity Options Coming to 401k Plans (30:08–48:11)

a. Introduction and The Debate

• Wes frames private equity in 401ks as a seismic, potentially positive change—yet Clark is “freaked out.”
  • Quote [31:04], Clark Howard:

    “…When a lot of brokerages are pushing private equity, they're selling a lot of these blind pools…big commissions, big fees…”

• Historical context: Private equity was reserved for wealthy, accredited investors. Now, mechanisms will allow regular workers to have access inside retirement plans for the first time.

b. Fee Structures, Transparency, and Risks

• Clark’s Concerns:
  • High, often opaque fees (sometimes “seven layers” of fees and commissions)
  • Locked-up capital, lack of liquidity—investors could wait 5–12 years for returns
  • Potential for exploitation of small investors, reminiscent of terrible, fee-heavy 403b plans pushed on teachers
  • Inadequate investor sophistication or understanding; risk that marketing and peer advice (“Hey, Jim in Accounting said…”) will steer people blindly
  • Quote [37:44], Clark Howard:

    “That’s where I fear here because…private equity has always been kind of hidden behind a curve.”

• Wes’s Moderate Optimism:
  • PE fees have declined (now as low as 1%/year, 5–10% of profits in some funds)
  • If structured right—only as a sliver within well-diversified, target-date funds—could offer new opportunities and democratize access to returns from America’s many private firms (which make up 90% of large businesses by revenue)
  • The “devil’s in the details”: Will the industry “Vanguard this” (low-cost, transparent) or “403b this” (exploitative, fee-heavy)?

c. Liquidity, Complexity, and Regulatory Questions

• Old-school private equity often ties up money for up to 12 years—Clark fears most 401k participants will find this completely at odds with how they’ve been taught to invest (daily liquidity, flexibility).
• Newer models (open-ended PE funds) may allow more flexibility, but might still carry higher fees, less transparency, and illiquidity.

d. Ethical and Social Considerations

• Clark and Wes agree that private equity, as an investment structure, is not inherently evil—but company behavior post-acquisition too often harms employees and company culture.
  • Quote [47:39], Wes Moss:

    “It's the last thing you want…a private equity company buy your family culture, wonderful company because it will not stay that way.”

e. Final Thoughts

• Clark is wary but will “watch closely.” Wes is optimistic but agrees full transparency, low fees, and investor education are critical.
  • Quote [46:20], Clark Howard:

    “The problem…is how's this actually going to play out? And that's my fear.”

• Both stress that, ultimately, the addition of private equity must not compromise the low-cost, transparent essence that has made 401ks a fair tool for everyday investors.

Memorable Quotes from This Segment

• [34:05] Clark Howard:

  “Private equity has always been kind of hidden behind a curve. And so that's what I worry about is the lobbyists running this through…they're going to do this in a way that the little guy is going to get taken advantage of.”

• [39:53] Wes Moss:

  “You're worried about the fox running into the hen house. And the hen house has been more and more protected over the years for the average 401k.”

• [47:48] Clark Howard:

  “If you look at capitalism as just a pure event, obviously private equity is ultra important and meaningful for investors. It's just how this is going to play out for everyday people. I'm freaked out.”

Timestamps for Important Segments

• 01:10 — Show starts & banter about confusion (“fog”) on investing issues
• 03:40 — Stock market overvalued? Introduction to “AI bubble”
• 05:00 — Comparison to the dot-com era and “irrational exuberance”
• 07:26 — AI investment arms race and pitfalls
• 13:27 — Market concentration at all-time highs
• 15:06 — Index funds vs. equal-weighted funds: valuation debate
• 17:08 — Risks of overconcentration in tech/AI stocks
• 19:33 — Diversification as behavioral protection: “dry powder” concept
• 21:30 — “Perfect timing” vs. “perfectly bad timing” market study
• 25:13 — Summary of balance vs. chasing hot areas
• 30:08 — Private equity in 401ks: the start of the debate
• 32:38 — Clark’s red flags: fees, commissions, transparency
• 34:27 — Historical context: expensive “manager-led” funds
• 36:00 — Democratizing access vs. exploiting regular workers
• 43:30 — Illiquidity risk: PE holds can be 10–12 years
• 46:01 — Democratization: “Why should just the 0.1 percenters be able to access that?”
• 48:11 — Wrap up: importance of transparency, investor education, and systemic safeguards

Original Tone and Style

The conversation is lighthearted yet direct and passionate, with friendly sparring, real-world analogies (roller coasters, “fox in the henhouse”), and clear concern for the challenges faced by everyday investors. Both hosts use approachable language, referencing both statistics and emotional finance “pain points.”

Summary Takeaways

• On Overvalued Markets:
  • The stock market, especially large-cap tech, is expensive by history’s standards. Most dangerous: overconcentration and overconfidence, often driven by social/media hype.
  • Sensible, boring diversification—with a solid chunk of “dry powder”—is still the safest strategy for non-professionals.
• On Private Equity in 401ks:
  • Potential for democratization of private markets, but heavy risk of high fees, opacity, poor liquidity, and exploitation.
  • How plans are structured and regulated will determine whether this is a “Vanguard moment” or a “403b debacle.”
• Investor Advice:
  • Don’t chase hot sectors or over-layer risk—stay diversified, pay attention to costs, and build a portfolio that you can emotionally ride out through all market cycles.
  • Be particularly wary and demand utmost transparency with new 401k options, especially private equity.

Final Note

Clark Howard:

“You can't become so myopic that you're only into whatever the hot flavor is.”
Wes Moss:
“Balance is so important…Try to limit that draconian loss before we go into the next major drawdown.” (20:50)