US equity markets hit record highs this week, even as the government entered its first shutdown in seven years. The question investors are asking: is there nothing that can stop this rally?

Sara Naison-Tarajano is the Global Head of Private Wealth Management Capital Markets and Apex Family Office Coverage.

She hosted Goldman Sachs’ first Middle East family office gathering in Dubai, and joined me to talk through risk, AI bubbles and hedging strategies for some of the world’s wealthiest families.

Shutdown: Short-term uncertainty, long-term confidence

The US government shutdown adds another layer of uncertainty. “If this shutdown continues and results in large-scale government firings, it will be negative for markets and GDP,” Ms Naison-Tarajano warned. But she emphasised that swift resolutions historically mute the impact.

For now, productivity gains and strong earnings continue to underpin US growth. “This is not a market I’d want to be on the other side of,” she said.

AI bubble risk: $500 billion valuations

Almost in the same breath as shutdown fears, another headline hit markets: OpenAI’s valuation at $500 billion, making it the world’s most valuable start-up. Even Sam Altman, the architect of its rise and its current chief executive, has warned about the potential for an AI bubble.

Ms Naison-Tarajano acknowledged the enthusiasm but called for caution. “AI is still in its infancy. It’s very hard to predict what this revolution will look like one, three, or 10 years out,” she said. Her advice: don’t put all your eggs in one basket. Diversification, index exposure and disciplined hedging remain the smarter play – even as family offices hold sizeable positions in AI names.

Risk appetite: Family offices lean in

Ms Naison-Tarajano pointed out that many family offices lean into risk when traditional institutions retreat. “They are 'risk-on' when everyone else is running away,” she said, recalling how families moved into markets during US President Donald Trump’s trade tariff announcements this year. “They take advantage of dislocations.”

Hedging and concentration risks

Even as wealth grows, Ms Naison-Tarajano said concentrated single-stock gains now require more thoughtful risk management. Hedging strategies – from options to diversification across asset classes – are increasingly on the table for family offices with large exposures.

Bottom line

Family offices are staying cautiously optimistic, hedging against volatility and positioning to take advantage of market dislocations. With shutdown uncertainty, record equity highs and soaring AI valuations, Ms Naison-Tarajano’s message is clear: discipline and diversification matter more than ever.