The entire US economy is currently being propped up by growth in the AI/tech sector. And I am convinced that LLMs are fundamentally incapable of delivering on the promises being made by the AI CEOs. That means there is a massive bubble that will eventually burst, probably taking the whole US economy with it.
Let’s say, for sake of argument, that I am a typical American. I work a job for a wage, but I’m mostly living paycheck to paycheck. I have maybe a little savings, and a retirement account with a little bit in it, but certainly not enough that I can retire anytime in the near future.
To what extent is it possible for someone like me, who doesn’t buy into the AI hype, to insulate themselves from the negative impact of the eventual collapse?
Normally I would agree.
But the weight of this one obviously hyped sector is measurably, historically huge: https://www.apolloacademy.com/wp-content/uploads/2025/09/ExtremeAIConcentration-090825.pdf
With a lot of “circular investment” reminiscent of previous bad behavior: https://www.axios.com/2025/09/25/nvidia-openai-investment-ai
Obviously don’t sell after a crash, or sell the absolute least you can to live; that is rule #1.
…But I think it’s prudent to save a bit extra and shuffle some investment out of the S&P 500 pre-emptively, as it’s starting to resemble an AI evangelism hype fund. I’m not that old/experienced, but I’ve never seen anything like this in the market, especially from my perspective in the ML tinkerer community where, ironically, it’s obvious how much this all stinks. All the academics know it.
Risk tolerance is definitely a thing and I’d argue being all in on the s&p500 is already poor diversification. Global broad market etfs would fare better. The worst thing to do regardless of tolerance or portfolio is selling at crash.