The Lasagna Market: AI, Diversification, and the Return to Normal Investing

Every few years, investors start to feel like something fundamental has changed about the markets.

The headlines are louder.
The technology feels more disruptive.
And the pace of change makes it seem like the old rules may not apply anymore.

Right now, many investors—especially those in their 40s, 50s, and early 60s—are asking a version of the same question:

Is the market still the same place to build wealth that it used to be?

It’s a fair question.

Artificial intelligence is reshaping industries.
Interest rates have reset after more than a decade near zero.
Geopolitics dominates the news cycle.
And the last ten years of stock market returns were unusually strong.

All of that creates a sense that we may be entering a completely new financial era.

But the reality is more subtle than that.

The market is evolving, like it always does.

Recently on the Stuff About Money They Didn’t Teach You in School podcast, I sat down with Phil Blancato—Chief Market Strategist at Osaic Wealth and a regular voice on Fox Business—to talk about what this new phase of the market might look like.

Phil and I have done this conversation a few times now, and it’s become a bit of an annual tradition.

We decided to start this year’s discussion with a lightning round.

Now, if you know Phil, you know he’s also a very proud Italian—something that shows up in his stories, his cooking, and occasionally even his market analogies.

So one of the questions I asked him was simple:

If the market were a pasta dish, what would it be?

Phil didn’t hesitate.

“It’s lasagna. There are lots of layers, each one a little different, but together it can still taste really good.”
— Phil Blancato

At first it sounded like a funny off-the-cuff answer.

But the more we talked, the more it started to feel like the perfect description of the market we’re living in today.

Because the market right now isn’t driven by a single story.

It’s a combination of layers:

• artificial intelligence
• energy infrastructure
• broader market participation
• interest rates resetting
• global trade shifts
• productivity gains

Each of these forces influences the others.

And when you step back and look at the whole picture, the market begins to make a lot more sense.

In other words, today’s market might really be a lasagna market.

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A Return to Normal Market Behavior

For much of the past decade, markets were driven by two powerful forces.

First, massive government stimulus flooded the system after the financial crisis and again during the pandemic.

Second, a small group of extremely large technology companies produced enormous growth.

The result was a market where returns were both higher than usual and more concentrated than usual.

Investors got used to it.

Above-average returns began to feel ordinary. A handful of companies—often called the “Magnificent Seven”—drove a huge share of those gains.

But historically, markets rarely stay that concentrated forever.

Leadership rotates. Different sectors rise and fall. And broader participation tends to return.

Research from Osaic shows that market participation has already begun widening beyond a small group of mega-cap technology companies.

Research from Osaic shows that market participation has already begun widening beyond a small group of mega-cap technology companies. In other words, more companies across different sectors are contributing to market growth rather than a handful of names carrying the entire market.

That doesn’t necessarily mean weaker markets.

Often, it means healthier ones.

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AI Is the Story — But Not the Whole Story

Artificial intelligence is clearly one of the most important economic forces of this decade.

But when investors think about AI, they tend to focus on a small number of companies: chip manufacturers, large technology firms, and highly visible software platforms.

The reality is much bigger.

AI isn’t just a technology story.

It’s also:

• an energy story
• an infrastructure story
• a productivity story
• and eventually a labor story

Every time someone uses AI—from generating a report to analyzing medical images—enormous computing power and electricity are required.

That means demand for:

• data centers
• fiber-optic infrastructure
• semiconductors
• and power generation

is rising rapidly.

As Phil explained during our podcast conversation:

“The defining question for AI now is simple: which companies are actually making money from it and which ones are getting disrupted by it?”
— Phil Blancato

Some of the biggest long-term beneficiaries of AI may not be the companies building the software—but the ones providing the infrastructure that makes the technology possible.

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The Quiet Comeback of Diversification

For years, diversification felt almost unnecessary.

If you owned the biggest tech stocks, you were doing just fine.

But markets rarely stay that concentrated forever.

As AI spreads across industries and productivity gains begin showing up in unexpected places, leadership is likely to broaden.

Small- and mid-sized companies may benefit from adopting AI tools that improve efficiency.

Industrial firms could see gains from automation and smarter manufacturing.

Energy and utility companies may grow faster than investors historically expected as electricity demand increases.

Even international markets—which lagged U.S. stocks for years—are beginning to show signs of life again.

During our conversation, Phil put it simply:

“To have a good portfolio in this environment, you’re going to have to be invested in a lot of different areas. It’s not just one trade anymore.”
— Phil Blancato

This doesn’t mean abandoning the winners of the last decade.

It simply means the next decade may require more balance across sectors, regions, and asset classes.

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Why Bonds Are Suddenly Interesting Again

For much of the last fifteen years, bonds were the boring part of a portfolio.

Interest rates were so low that many investors viewed them as little more than ballast—something meant to reduce volatility but not generate meaningful return.

That environment has changed.

Today, many high-quality bonds once again provide meaningful income for investors.

And when that income exceeds the rate of inflation, investors are earning something that was difficult to achieve in fixed income for much of the previous decade: a real return.

As Phil explained:

“When you can buy a safe asset that pays you more than inflation, you’re getting paid to wait.”
— Phil Blancato

Bonds are also reclaiming another role they historically played in portfolios: stability during market stress.

Stocks and bonds won’t always move in opposite directions, but when volatility appears, bonds can provide both income and diversification.

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Headlines Are Not the Economy

If you follow financial news closely, it’s easy to feel like the world is constantly on the brink of crisis.

Wars. Trade disputes. Political battles. Market corrections.

The headlines rarely stop.

But markets and economies don’t move based on headlines alone.

As Phil said during the podcast:

“Finance 101: never panic because of a headline.”
— Phil Blancato

The primary driver of the U.S. economy is still the same force it has been for decades:

the American consumer.

When employment is strong, wages are rising, and households feel confident enough to spend, the economy tends to keep growing—even when the news cycle suggests chaos.

That doesn’t mean markets move in a straight line.

They never have.

Volatility is normal.

Panic is optional.

As I shared during the conversation:

“Your ability to build wealth in the stock market is contingent on you staying invested in the stock market for the long term.”
— Erik Garcia

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The Lesson for Investors in Midlife

For people in their 40s, 50s, and early 60s, the next decade of investing may look different than the last one.

Market leadership may rotate more frequently.

Technology will reshape industries faster than before.

And diversification may matter more than it has in years.

But the core principles of building wealth remain remarkably stable.

Stay invested.
Diversify thoughtfully.
Ignore the daily noise.

And remember that markets have always evolved—and yet over time they have consistently rewarded patient investors.

Artificial intelligence. Energy infrastructure. Interest rates. Global trade. Productivity gains. Demographics.

These forces are all shaping the market at the same time.

Sometimes the whole picture can look messy or confusing in the short run.

But markets influenced by multiple forces can still produce strong long‑term outcomes—especially for investors willing to stay patient, stay diversified, and focus on what actually drives wealth over time.

Which brings us back to Phil’s answer during the lightning round.

When I asked him what pasta dish best describes today’s market, he didn’t hesitate.

“It’s lasagna. There are lots of layers, each one a little different, but together it can still taste really good.”
— Phil Blancato

In other words, today’s market isn’t simple.

It’s layered.

And sometimes the best way to navigate a layered market is the same way investors always have:

Stay disciplined. Stay diversified. And stay invested.