Last week, I referenced the seventeenth century Dutch tulip bubble. No doubt, there’s a lot we can learn from history. But sometimes, current events can teach us just as much. I see three valuable lessons in today’s market.

1. Myopia. Open any finance textbook, and you’ll find that most of the ideas are built on the notion of “present value.” In simple terms, this tells us that an investment should be worth the sum of its future cash flows. A public company’s stock price, for example, should correlate with its ability to generate profits in the future. It’s for this reason that investment markets generally tend to look forward.

Professional investors take this idea as their North Star. When sizing up a company, Wall Street analysts will try to estimate revenue and profits for each year into the future. In some ways, it’s a very logical approach. The challenge, though, is that these estimates often end up being just guesses. There are too many factors that could affect any given company at any given time.

Consider a recent example: On April 2, in a policy announcement dubbed Liberation Day, the Trump administration announced a set of steep new tariffs. This caused the stock market to sell off, with some companies affected much more than others. But just a week later, the administration changed course and announced that most of these tariffs would be put on hold. In response, the stock market rebounded nearly 10%.

This one example illustrates an important dynamic: Not only do investors not know which way public policy is headed, but even policymakers themselves don’t know. So even though markets generally look forward—an approach supported by economic theory—this ends up being of little value, because no one can see around corners. And thus, it’s generally fruitless to make portfolio changes based on expectations about the future.

2. Attention span. In a recent commentary, Bloomberg observed that global markets were exhibiting contradictory behavior: “The never-ending back and forth on tariffs. An escalating war in Ukraine. Growing concern about the US’s mounting debt and deficits, and a congressional budget process that seems unlikely to address the problem. Sounds like a recipe for a bear market, and yet global stocks just hit an all-time high.”

Why have stocks been rising despite these negative trends? One explanation is that investors think the White House won’t follow through on its most serious tariff threats. That’s one possibility, but I’m not sure that’s the only reason. Consider that on Tuesday of this week, the White House announced a doubling of steel and aluminum import duties. We’re clearly not out of the woods yet on tariffs.

So why do investors no longer seem fazed by trade-related news? I believe there’s another factor at play. An event earlier this year can help us understand.

In late-January, a new AI tool known as DeepSeek made news when it became the most downloaded application from Apple’s App Store. What was notable was that DeepSeek, according to news reports, required just a fraction of the computing power needed to build other AI services like ChatGPT. The market’s reaction was swift: Nvidia, the primary supplier of semiconductors to AI firms, saw its stock sink 17% in one day. If DeepSeek’s claims were true, it looked like big trouble for Nvidia.

Since then, however, Nvidia shares have recovered nearly all their earlier losses—but not because the DeepSeek threat has gone away. There hasn’t been any update on DeepSeek’s claim to be built on fewer chips. Instead, Nvidia’s stock has recovered for the same reason, I believe, that the overall market has recovered, despite the risks Bloomberg highlighted: Investors simply have short memories, or perhaps short attention spans.

It’s hard to explain this phenomenon. Perhaps it’s just because news cycles move quickly. Whatever the reason, it’s not necessarily rational, but it is a reality. And it’s why investors are best served, in my opinion, by never reacting too strongly to the news of the day. As Tony Hsieh, founder of Zappos, used to say, “things are never as bad or as good as they seem.” This motto applies equally well to investing.

3. Permanence. In the investment world, there’s the expression that trees don’t grow to the sky. That is, nothing is forever. Kodak, Xerox and BlackBerry prove that. But when we look at today’s market leaders—Apple, Google and Amazon, for example—it’s hard to imagine that they might some day face the same fate. We may be seeing something like that happening now, though.

Since ChatGPT arrived in 2022, cracks have started to appear in Google’s market dominance. According to industry data, Google’s search engine market share, which had been over 90% for more than a decade, has slipped by a handful of percentage points. About a month ago, Eddy Cue, an executive at Apple, confirmed this. Google traffic on iPhones, he said, had fallen in April for the first time ever. This caused Google parent Alphabet’s shares to fall 7% the next day.

What’s interesting is that Google wasn’t completely unaware of AI before ChatGPT was released. For years, it had already been working on its own AI tool but, for whatever reason, hadn’t released it. This decision was reminiscent of Xerox’s famous Palo Alto Research Center (PARC), which had invented everything from the mouse to the laser printer to local-area networking but failed to commercialize any of it.

Google’s decision to keep its AI product under wraps was reminiscent also of the decision Kodak made in the 1970s, when one of its engineers invented the digital camera, but the company refused to commercialize it, fearing it would cannibalize its film business. According to Steven Sasson, the engineer who created that first camera, management’s reaction was: “That’s cute—but don’t tell anyone about it.” The result was that Kodak ultimately fell into bankruptcy.

These kinds of results, though, aren’t always a one-way street. After years of dominating the market with its Windows software, Microsoft was repeatedly caught flat-footed—first by the internet and then by mobile computing—but it ultimately found new businesses, and today it’s larger and more profitable than ever.

Which way will Google go? It’s an open question. While it’s losing market share in its traditional search engine business, it’s quietly gaining traction with its Waymo self-driving cars—an important opportunity since the automobile market is many times larger than the search engine market.

The bottom line: Investment markets are wholly unpredictable. Even when a given trend looks reliable, it can reverse. Even when policymakers make pronouncements, they can change their minds. Even when a company dominates its industry, it can be usurped. Thus, simplistic as it may sound, broad diversification will likely continue to be investors’ best defense against an uncertain future.​