Is there any way the average American can insulate themselves from the AI bubble bursting?
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?
As a, uh, atypical American, and someone into the ML scene and previously employed in an LLM dev job… I agree.
I don’t think ML is going away, as what’s been made so far are niche tools in the same way a hammer is, but the level of hype and conning is literally criminal.
If you can shift stocks around, take them out of indexes and put the cash in crash-resilient stocks like Berkshire Hathaway (which somewhat famously/infamously saves cash to buy dips during crashes), or Walmart. I’m thinking on such a “Noah’s Ark” basket for myself.
I’m not knowledgeable enough to comment on bonds, gold, or whatever else your savings may be in. But don’t believe a word anyone says to you about crypto.
Start saving a bit extra too, if possible, as the crash may not come for some time. And you want to avoid selling invested savings when the markets at its lowest.
On the tech side, you can get more into self hosting to not be so dependent on Big Tech. You're on the perfect site to learn that.
If you ask me, that even includes dabbling in open-weights ML stuff, as that might suddenly become a more marketable skill once all the OpenAI hype implodes, and companies sipping the Koolaid turn more practical/frugal.
Other than that… I dunno. Depends on your work and lifestyle, I suppose. I think this will be a bumpy ride no matter what we do.
As a security engineer, I implore anyone to have an LLM walk you through standing up an SIEM.
Like don't get me wrong. They're phenomenal. But they just aren't capable of complex tasks yet.
The current architectures fundamentally aren’t capable of such complexity, no matter how big they get or what prompt wrappers they have.
There are some interesting, deeper innovations in papers, but the AI hyperscalers seem to have little awareness of them, and I’ve seen so many cool experiments just drift by with no further testing these past few years. Which, again, suggests whatever approach the purse holders are taking is not a “innovate our way to better complexity” one.
Not a useful answer, but a reinforcement of the problem.
Without data centers, GDP growth was 0.1% in the first half of 2025, Harvard economist says
That's pretty horrific.
It's also not completely fair, some of that money would have been spent elsewhere without datacenters. Investors still gonna invest.
But what if the net ROI on those data centers is massively below the working average cost of capital… what is stated above is still massively destructive to capital and economic activity
Oh yeah it's definitely bad in the long run. I'm just saying that it isn't fair to say that the economy wouldn't be growing without these new datacenters.
Hard assets make a lot of sense when paper assets do not.
Real estate and precious metals are the traditional hard assets. The stock market can implode, but a home will remain a home, an acre will remain an acre, an ounce will remain an ounce.
There are difficulties and risks and efforts required with hard assets, theres a reason why soft assets developed, but when things go wrong people trust what they can hold and walk on - and thus seek real estate and precious metals as they are certain and tangible.
With a little more trust in the system, there are softer assets available such as bonds, specifically treasury bonds, and there are etfs that attempt to exclude the ai bubble such as XMAG, or the sp500 but equally distributed instead of by market cap which increases diversity like RSP to reduce the fallout of the ai bubble pop
Theres a million ways to navigate a bubble, do the research and find confidence in your plan, and think about how you'll react in various scenarios, especially when the numbers go down or arent going as high as expected
I saw that you put a caveat in there about it, but I'm going to make it a little more clear.
If anyone here has lived through the dot.com bubble in Seattle (and probably the bay area), they'll have seen that real estate is great if it's paid for. If you go underwater on your loan and kicked out, which is how the banks got so much real estate in 08, you're fucked. There *are no general rules, but guides.
In general, investing borrowed money is risky... People just don't realize they're doing that when they take on a mortgage.
This reminds me that I wish there was a basic course on money and the systems around it, that explains everything like you just did. It's not magic, but it's obfuscated behind so many terms and people trying to sell content, that it's not a simple thing to figure out on one's own.
Real estate is a trouble prone investment normally, much less in this crazy market; I specifically wouldn’t want to touch that right now.
Can’t speak for metals, but also be careful there…
Thing about a bubble like this is you don’t know when it’s going to pop. I like the saying “the market can stay irrational longer than you can stay solvent.”
What I’m saying is to be careful about going all in on more pure hedges. If this lasts another 4 years and one's into stuff like XMAG and metals, and they drop in a crash anyway, you may end up in a worse position than if you had held the S&P 500. I think a better perspective is to avoid “buying a hedge” and instead invest in companies (or other assets) one thinks will be productive and grow with the bubble or not. They’ll grow however long the bubble goes, and keep growing after.
Buy cocaine futures, got it.
An ounce just isn’t the same anymore with all this inflation
I don't know about you but an ounce never remains and ounce you cut that shit make two ounces then someone else does the same and sells it as grams
cocaine prices actually went down due to trump/noem pulling CBP off the borders to support ICE.
I will be the contrarian in the room and say that you shouldn't really do anything different -- unless you know that you are going to need that money in the next year or two.
Let's take the S&P 500. Yes, we know there is an AI bubble, and the same 7 tech companies are knee deep in it. But it turns out that bubbles make money, until they don't. In fact, a good chunk of the growth in the S&P over the past two years has been in those 7 companies.. If you had made this bet 2 years ago, you would be a big loser now.
So what do you do? Don't panic sell. You can't time the market. Sell when you need the money for something else. Sell when you have a purpose. But don't be too upset when the bubble finally bursts, and it all dives 25% (or more!) . That was never real money anyway.
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.
Here, OP is asking about their situation even if they have almost no investments. In other words, they're asking about the downturn on the national and global economy, and how that could make their life bad. Since it obviously can (through, for example, job loss or difficulty obtaining groceries), then some amount of preparation might be reasonable.
Another good question is what to do if you have medium-size investments and you don't want to see them tank. That's what you are talking about.
"That was never real money anyway." Rich people sometimes say that, but everyone else knows you're wrong. We save a percent of our paycheck every month to make sure we have money for retirement. We all wish we had guaranteed benefits, but that system was scrapped by greedy rich assholes decades ago, so now we are gambling that our savings will increase, because if they don't, we'll be working until the day we die... So if we feel like that money is real, maybe we're right.
And if you feel like the money isn't real, can you give it to us? Couldn't hurt, after all, because it's all fake.
I believe they're referring to stock money not being real money since regular citizens have no power over whether that money disappears overnight or not. only billionaires do. nobody is criticizing your personal savings and idk why you'd take it that way. although during depressions that money might become inaccessible as well due to mass cash withdrawals
It's also funny how Lemmy is buying up this narrative.
What's happening is that Dementia Don is curb-stomping the US economy. AI investments, mainly in data centers, are the only thing that still seems promising. When you are on a trek and someone leads you through Death Valley, while pouring out all the water, you shouldn't blame the last horse that still keeps going.
Putting the blame in the right place would certainly help, with a view toward the mid-terms.
Financially: Diversify. Make sure that you are not completely dependent on what happens in the US. But mind that Europe comes with its own imponderable risks (ie Putin). Same with China. Maybe some old leader dies and the new crew runs everything into the ground; they go to war with Taiwan, that sort of thing.
I don't know that the OP or anyone else necessarily disagrees with you here. It's one of the reasons that I believe we're fucked when the bubble pops. Every other sector is shrinking otherwise, which is only making the mania more extreme.
Trump has fucked the economy, but I don't expect the next administration to be able to pull off a miracle and fix the mess we've created within the next 10 years. Foreign relations and our status as the reserve currency are shot to hell. The US is going to have to answer for our behavior.
Those last two sentences are very alarming for anyone paying attention. The dollar bond market is currently collapsing, and we were THE defacto world power because of our soft power. Farmers around me are currently paying the price at China is buying up all the cheap land they can, and although I call them my friends,I can't help but feel a certain schadenfreude as I told them trump was evil 8 years ago and the only comeback they have is "but other countries were scared of us then!". Like their entire lives are nothing but a zero sum game, and now they can't sell their soybeans. I may be a terrible person, but at least I can read the tea leaves.
Divest and buy labubu dolls.
There is a good reason why Warren Buffet is holding so much cash right now, he will be bargain shopping soon.
Still don't get this take.
Buying low only works if you can sell high.
At the rate we are going. Yer gonna have King Ratfuck fighting King Shit over a an empire of dirt.
This is how Berkshire has invested over the years. They try to time it, and buy the recession basically. When you're investing long term, you can either hold and ignore or sell early, losing a bit and buy again after the drop
You don't think halliburton made bank off of Iraq? I'm talking outside of the government contracts. A failing economy is good business if you're flush.
What did you do in 2020, when everything shut for COVID?
What did you do in 2008, when the arse fell out of the housing market?
What did you do in 2000, when the dotcom bubble popped?
Chances are the answer was "just shuffle on as normal, carry on living paycheck to paycheck, possibly get a new job if you work for somebody badly affected". Odds are your pension pot will recover by the time you need it.
What do rich people do? They gamble. Watch The Big Short. You could try that, but chances are you'll lose money. "The markets can remain irrational longer than you can remain solvent", as the old saying goes.
Buy low when everything crashes and wait for it to recover in 3-5 yrs.
I haven't seen a job with a pension in the last 18 years being in the workforce.
Unions and Government jobs have pensions. But if you have a 401k or any type of IRA, the same people who invest pensions are also doing that investing for you if you aren't managing it ( IE: mutual fund and etfs) and the investments are pretty much the same for both, so if pensions tank, so will your 401k.
I had a pension at my last job about 11 years ago. Then not long after I left with it fully vested congress passed a law allowing companies to creatively value pensions far lower than they should have been able to and most companies "bought out" the pensions for a fraction of their value. My pension got turned to mush, then a few month later congress passed a law "fixing the glitch" after most large corps had done their dirty work. My pension would have paid out about $800/month on retirement (likely not great depending on inflation), but their reassessment made it more like $150/month which probably won't cover a phone bill when I am retired.
That's wild
Yeah, it sucks. I was not relying on that pension as it was never going to be huge, but it was a big part of why I stayed at that company for over a decade.
Gov jobs still have them
Sort of. I'm a gov worker (non fed) and mine is a joke. 1% of salary per year of service. Not very significant. The old scheme was 2.5, I think, and before that it was 30 years to full salary. I still work with people on that old one, and they're about at the full 30. In a generation it's gone from a nice retirement to being more like a supplement. We do pay into SS now though so I guess that's meant to replace it.
Been to 3 jobs that offer pensions and they all tell the same story you're giving.
It's right in the handbook. Hired before X date and you get 25 years to full salary retirement. Before Y date and 30. Hired after 2008 and it's all the same. 33 Years gets you 33% of your salary. Which ain't gonna be worth much thanks to inflation.
I worked next to people who at 60 had a full pension coming in, and then collected a full second salary because they're allowed to DROP - which means work and collect the pension. One mfer was working on retiring twice to collect 3 paychecks. That is no longer an option for my generation either.
alot of people are also working after retiring otherwise. pension aint enough anyways,.
Not necessarily. I had a relative who worked for the federal government back in the 70s/80s, and at the time they were trying to get everyone to switch (it was a voluntary choice for people who were in the 'old' system) to the new, non-pensioned options. I can't imagine that the government suddenly decided to return to pensions.
My experience in small, local government was that everyone was on a matched % of paycheck being put into a retirement account. If you worked for a set number of years with the city/county/parish/state your investment would be matched at a specified rate when you retired. Basically just a glorified retelling of a 401(k).
Do you not have a pension saving scheme that gives a tax break when employers pay into it direct from your wages?
In the UK it's pretty standard. I think it's even a legal requirement for employers to offer it, even if the amount they put in is paltry.
In the US those've been almost universally replaced by 401k plans, which I assume is what they're referring to.
I'm in the US, so nothing guaranteed. I have a 401 and a bunch of other pots around.
Some made big money in 2008.
A lot more lost it.
Lots of reasonable personal advice here. I want to suggest some community driven ideas, though they're less fleshed out than I'd like.
Look into community and common gardens (and if they don't exist, start pushing for a local org to make such space). If you are renting, look into tenants unions (or consider organizing your own).
Invest some in food kitchens + homeless shelters now, while you've got something to share. Consider volunteering and becoming more familiar with the resources (you may not need it, but others could).
Consider broader political organizing. The people in power (even in local positions!) when the crisis hits will definitely matter. America gave big buy-outs to businesses during previous crashes; but it could payout to citizens just as easily. Lookup and start discussing policy solutions that could help insulate you and your community. Bring this up at a city council meeting. Write a county representative.
This is a great question, I’ll be watching the replies. I had a similar thought this morning as I was checking how my very humble ETF investments were looking, and I remembered that NVIDIA is a chunk of one of them…
I don’t have much disposable income to invest, but I like to put a little bit in non-fossil fuel ETFs, and I feel like they’ll get super risky once the bubble pops (which I agree, it will).
I'm also going to watch replies.
Don’t be in debt.
Be in debt and cross your fingers for hyperinflation!
I would like to point out it's only recent gdp growth being propped up by ai. It's not like our entire economy relies on ai.
The seven primary companies that are trading around the same tens of billions of "investment" and "credits" are worth 34% of the S&P 500.
Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, Tesla.
All of them are betting HARD, because CEO types think they can be first to market with the singularity and win. (That may be oversimplifying a bit, but every one of these companies is run by Nazi collaborators. Make stupid calls, win shitty reputation.)
While true, those companies all have solid revenue streams that aren't directly related to AI. If a bubble pops they'll all suffer, but all of them were profitable before the AI boom and can survive without it. It's very different from the dot bubble because that was driven by speculation and many companies weren't making any profit back then.
I completely agree with most everything you said, but I will note that Apple is an outlier in that they are not investing deeply into ai. They are a shit company, and Tim Cook is most definitely a Nazi collaborator, but they are not a crutch of this current bullshit market.
That's fair. They're behind, but definitely playing. "Apple Intelligence" has been around for a year, just badly under-developed.
Apple plans to 'significantly' grow AI investments, Cook says | TechCrunch
Buy other stocks, not American ones. They will also be affected but not as much.
If you are living paycheck to paycheck, you cant do anything.
Follow the classic financial advice of setting aside enough emergency savings for a period of unemployment and diversifying the asset classes in your investment accounts (eg, retirement, health, education savings) to align with your risk tolerance & goals.
I keep 6 months of emergency savings in a high-yield savings account & let a robo-adviser passively invest my other savings on autopilot. While that means losses with market downturns, all the advice I've read & studies they refer to that run simulations over historic data (including shocks, downturns, bubbles) say that impassively holding that strategy has historically come out gaining & beating inflation.
I do wonder...
With most economic crashes, the rich get even richer. This time it's different, though.
Right now, the top 8 richest men in the world have as much wealth as the bottom 50%. Homelessness world wide is at an all time high, and a huge swath of people can't afford all the basic necessities anymore.
If an economic crash happens now, will the 99% of the people finally wake up and just TAKE the resources from that 1%, like it or not?
What do billionaires think will happen to them once shit really hits the fan?
Why?
I highly doubt your homelessness stat. If it is at an all time high by any metric, it is almost certainly a statistical artifact from (1) increased homelessness in developed nations, where tracking is decent and (2) improved tracking in developing nations. Meanwhile the people who can't afford "basic necessities" are, again, in developed nations - places where the notion of what constitutes basic necessities would be considered grand opulance in many parts of developing nations.
Instead, the majority of people in the world have seen improvements to their quality of life over the past 20, 40, and 60 years. Improved water and sanitation systems, more robust and resiliant food systems, greater access to life saving medical care, huge drops in infant mortality, hugely increased access to technology and education.
This is, quite frankly, a ridiculous fantasy. The wealth of the top 1% primarily exists not in vaults of gold bars, but in the ownership of what are intangible human constructs. Particular segments of land (lines on a map); businesses (organized structures of people); intellectual property (literally just ideas).
Elon Musk, for example, has a large portion of his wealth in Tesla. Of course, Tesla has physical assets in its factories and such. But most of the value of the company is speculative - people expecting Tesla to be wildly successful in the future. The next part of its value comes from IP - the exclusive ownership of its various inventions and innovations. And another part comes from the organizational structure itself and the knowledge and intelligence of the individuals who make up that structure. At its root, the value of Tesla is the goose that lays the golden eggs (Musk's cult of personality and the expertise of the individuals that make up the business) and investor confidence that the goose will continue laying golden eggs. In your glorious revolution, presumably Musk will be beheaded, and all the Tesla employees will scatter to the far winds as the proletariat storms their offices. Without the stable interaction of these technical experts, no more innovation happens, and investor confidence dries up (assuming the investors weren't also beheaded). The wealth of Tesla, then, does not go to the people, but goes up in smoke.
A revolution premised purely on taking assets from the rich has a predictable ending: in the slim chance that the revolution succeeds, even if the tangible wealth is equally distributed to the people (also a slim chance), the engine that generated that wealth has been destroyed and, deprived of the ability to generate new wealth, the people eventually spend away their windfall and are left with less than they had before they started. This sort of phenomenon was literally the impetus for Adam Smith to write The Wealth of Nations. Spain had spent a couple centuries robbing the Americas of its gold via murder and slavery - enough to literally collapse the price of gold in Europe. And yet, during Smith's time, Spain was in dire financial straights while England was the world's predominant economic power. Why? Because England had invested in technology and had developed industrial factories. It had invested in public and private institutions (ie, structures of people) that would continuously generate new wealth, rather than relying on hoarding gold bars.
The "glorious revolution" fantasy, meanwhile, is largely counterproductive to the actual goal of improving normal people's lives and improving the equality of political and economic power, because it plays into the childish notion that if we just throw a big enough temper tantrum, then we will get our way. And maybe that might be true for a brief moment. It is certainly true for some children some of the time that if they yell and scream and cry enough, they will be given the ice cream they want. But they only get that ice cream because there is an adult there, listening to them cry, who has a job that makes money that they can then use to buy the ice cream. The problem is that, ice cream or not, at the end of the day the child is still a child, completely dependent on the adult to provide for all their needs and make all their important descisions. The child gains real autonomy in their lives not when they throw "The Glorious Temper Tantrum" - they gain it when they get a job outside the purview of their caregivers and are able to spend the money they make at that job on the things of their own choosing.
So, too, with average people growing out of the controlling influence of the political and economic elite. Independence is achieved via building things - communities, relationships, physical infrastructure, businesses, governments, unions - which can be relied on instead of the options presented to us by the elites. And building things takes time and effort. It doesn't happen overnight with a few molotovs and a good photo op - that's the narrative the elites want you to believe, the one they put in all the popular movies and tv shows, because it is the strategy that is absolutely sure to fail. The idea that The Great Battle will be followed by Happily Ever After serves the elites because it tells us that we will win when we just put in a reasonable amount of effort right at the very last moment, and then we can relax. This is not how the world works. No - the world gets better when people put in unreasonable amounts of effort right now to gradually improve things and build things bit by bit, and keep putting in that effort for years and years and years. Sure, maybe there will someday be a tipping point or a big marker in history that we can point to and say "ah, that's when things changed". But make no mistake - that moment can only happen, and will only lead to a better world after the fact, because of the long term, boring hard work of people who care more about building things to help their friends than destroying things to hurt their enemies.
What do you think would happen to billionaires in that scenario? The richest people in the world, who all own their own islands and mega yachts and can easily pay anyone enough money to do whatever they want?
No one is “taking” what they want from them lol.
How? How is this fantasised about economic crash different?
You act like billionaires are some smooth brained Neanderthals who will lose their mind in a few days if they can’t get their favourite smoothy lol
You’ve got absolutely no idea how the real world works lol. This reads like some fanfic erotica for people who hate billionaires.
In a world like you’re talking about everyone would be out for themselves, not just billionaires, and at that point billionaires will have even more power because they could pay people to shoot-on-sight anyone that comes near their property, and they could just seize the means of production of whatever they wanted to. They can afford to buy whoever they need to, to get whatever they need to.
And I’m saying they couldn’t just cut them off lol.
they will think it will be safe to flee to thier bunkers or compounds, in other countries, but they dont have the forethought of having staff they need to pay , or even services like waste removal down.
They all have been building bunkers.
they would have to staff them, and pay them, i doubt they thought that through. thats probably why alot of them are into trafficking.
So. I have been through the tech bubble and housing bubble and this got me to investigate the great depression and what I found is. No. I mean if your rich enough. Maybe. But things like real estate have reoccurring costs and things like gold you lose value in the buying in selling and its not liquid enough for you to deal with the economic situation you will have outside of investments. A normal person will have to use savings which include investments to get through it. Owning a home without a mortgage can be helpful unless you need to move for work. its complicated.
invest into real world assets instead of stocks. think of the infrastructure you'll need once everything stops working. food pantries, solar panels, ham radio, water purification, community self-defense, etc. basically solarpunk
This is all great stuff to have on hand, but not relevant for OP's question. They're wondering how to prepare for the equivalent of the dotcom burst or the 2008 recession, not a grid-down scenario.
why I mention prepping and mutual aid strategies is because you can't pay for daily living expenses if there are no jobs and food becomes unaffordable. in 2008 millions of people became homeless so we need to learn from them how they survived
I don't see the AI bubble burst affecting people to the same degree; I think it'll wipe out a lot of investment portfolios, but non tech-sector jobs should be safe. I think it's useful to have some essentials on hand, but I wouldn't go on a buying spree if that means draining my savings; I'd rather have the flexibility of money. If it comes down to survival and you don't have savings, you could preemptively apply for lines of credit, use those to cover living expenses, and declare bankruptcy once they're wrung out. Not financial advice, but it's an effective stopgap.
Riding out economic ups and downs is really just about good personal finance. The good advice is the same in good times and bad, which is why it is good advice - in economics, you never really know when good or bad times are coming.
Your #3 is problematic.
The basis of the question is where to invest in order to avoid the coming AI crash. Your answer fails.
If you’re certain an “AI crash” is coming, then shorting AI companies is how you’d not only avoid the fallout but actually profit from it. That’s speculative investing though - basically gambling.
For everyone else without the ability to predict the future, the general advice stays the same: invest in low-cost, highly diversified index funds spread across sectors and regions. The markets are deeply interconnected, so it doesn’t really matter where you’re invested - when the market crashes, you’re getting hit. If you’re all in on tech, you’ll get hit hard; if you’re spread out, you’ll get hit less. But either way, you’ll feel it.
For someone in it for the long run, it doesn’t matter what the market’s doing. I just keep doing what I’ve always done - managing my finances carefully and investing my savings.
Shorting counts as income and you’ll be taxed on it as income. You also have a chance that no one will buy you out of the hole once it hits its mark.
Lots of risks in shorting.
While I agree with diversifying, the tariffs are fucking over the stock market hard in so many ways you cannot avoid it. Right now everyone sold their gold cuz they need money, And two days ago the tariff on China created a ripple on the precious metals. Tomorrow trump will fart some blithering assanine remark and suddenly for whatever reason lithium will take a dive for it.
Investing has become a stupid stress game.
I guess up your international market fraction (?)
..Tariffs affect other countries stock so you’ll get the same swing on the international. Im not sure you’re understanding how stocks work and maybe you’re just saying buzz words? Well... Either way, op is worried and they have a good reason to worry. They are educated enough about stocks to be worried. You…. You not so much.
Be nice!
US tariffs don't exclusively hurt other countries stocks. You can compare an international domestic and emerging markets index fund to US domestic ones and see quite a divergence. The one I'm familiar with, ACWI, is up 21.8% YTD.
So getting to the point: I’m not sure of the point you’re making here as the reference you’re using is all domestic funded in the US. You didnt provide the comparison to the international. And the point of the post was that the going up is the bubble OP is worried about. You’ve done nothing more than establish what was already the fact OP was posting on. We are well past this.
If youre laying down information I’m checking it because there’s a lot of misguidance and misinformation online. If you think it’s not appropriate to call it out then you have a big problem here. I’m not going to apologize for being a critical thinker and you’re just going to have to figure out a way to live with that cuz compromising myself isnt going to come at the cost of approval from random strangers online.
As far as politeness: so far you’ve not posted in good faith. And so I owe you nothing. Now you may proceed to clutch your pearls.
Right.
I will say also that if you want to hedge against AI, then you could invest in non-US based index funds.
Another option is to invest in something like real estate. Do the math and find something you can profit off of even with a down economy and you'll be able to get your investment to ride out the hard times and earn in the good times. But similar to index investing, these investments should be made with an eye on long-term gains (on the order of decades).
A final option - possibly the best - is to invest in yourself. Put the money into good health (physical and mental), skills that pay dividends (like being able to cook or do your own repairs, or building a community around yourself of hard working, optimistic, and sensible individuals. Skills education can be a great investment - either going to a university (careful here with costs, but college graduates still do tend to have better lifetime earnings than non-graduates), a technical school (AI probably won't replace plumbers for quite a while), informal self-teaching (you can learn a lot of skills just making personal projects at home or in a makerspace). And for the more ambitious, you can start your own business, which could be as simple as buying a ladder to clean people's gutters or a snow plow attachment and truck to plow driveways and parking lots.
Hard times are coming - they always are. The people who do well in hard times are the ones with a diverse set of useful skills, a resiliant set of assets, a positive mindset, and a supportive community around them.
If you’re certain there’s an AI crash coming then you could make a lot of money betting on it. Put your money where your mouth is and become one of the billionaires.
You could also just not invest money in AI companies.
Truth of the matter is that predicting and determining when the stock market crashes or if a recession already happened is hard. Saying definitively "there were warning signs and I should have sold my shares" is hindsight bias. When COVID happened, everyone thought that a recession will occur and pulled out their investments. The COVID-induced recession didn't happen and we have come with a better economy than before thanks to good handling of the economy by governments across the world. Those who sold their investments have to re-buy their shares but it is now at higher price than when they previously bought, and they missed out on potential higher profit had they stayed.
Of course, the world is not black and white and not all circumstances are the same. It is always a case by case basis and there are variables always at play. We came out well after COVID because we know that we definitely had a good leadership back then. But with economy under Trump, there is a higher chance of recession happening for obvious reasons, not just with AI bubble burst. In that case, it is still bad idea to sell all your shares because you would have to re-buy them at now premium price, but you could diversify your investments to safer countries or sectors in preparation for the high likelihood of a market crash. I have divested from US stocks and bought more European and Japanese ones, and invested in energy sector because it is more resilient even during economic troubles. I might have to rethink about my US healthcare stocks, however.
where and how to invest, most people dont have that knowledge. also migrating to other countries isnt easy to.
Don't have money invested in the stock market to prevent it from losing value during downturns
If you are already invested, you can be reasonably separated from the stocks that are inflating, when the bubble bursts, as long as you are diversified the overall dip will serve you.
The directly impacted industries, those AI companies, data centers, blackrock real estate which is currently heavily investing in local power generation, hardware. That kind of stuff will impact the market, but your money is in relation to units owned. That value will come back and you as a long term investor will make a multiplier on any money you lost, because you ownership, your shares continued to go up at the reduced cost.
If you need the money you have invested for living expenses, you are fucked, but long term investors come out of these recessions stronger every time.
That's managed investment, retail investors who are highly leveraged in the affected industries will be fucked.
Also look at gold, precious metals are a ridiculously solid investment, just don't buy them at the market highs put of panic.
The stocks that are inflating are a significant portion of the stock market.
When they crash everything will.
When that happens the only way to not lose is to not have money invested.
Right, they lose value, but you still retain ownership. As a part of the regular flow of things the money you make from those stocks gets reinvested into more ownership, something that keeps happening even when the value of those stocks fall.
As long as your ownership stays, the market will rebound and you will make a premium because the number of stocks you owned actually went up during the period of value loss.
When people talk about how much money rich people made during covid, they are largely talking about stock value, not just carpet bagging.
I'm sorry but I can only describe this mentality as cope.
The market rebounding requires diversified investors propping it up, which no longer exist.
If AI goes kaput the stock market is getting set back at least half a decade, it will rebound, over the course of a decade or so.
That's not good for people who need a retirement, like the vast majority of people invested in the stock market
See 2008. Now, multiply it by 7. Jacked to the tits.
Yeah, no the market has plenty of diversification, there have been times in history where our investments as a country have been much less diverse. When the AI bubble pops, and it will, it's gonna be just like all the other bubble pops we've experienced. People who didn't sell made back those funds after every crash. The people who needed the money right then, the elderly especially, we're totally fucked. They couldn't wait out the dips.
I'll grant you it's possible this is end of the American expirement because of mixing this with Trump, but i would have to ignore every other historical example. In which case the money won't matter at all because there will be no guaranter of American fiat currency, which means you'll see Argentina levels of inflation, we aren't even close to that yet.
No it'll pop, the rich who are heavily invested will make a ton of money when investors move their funds to another bubble, we're also in a real estate bubble! And the whole machine will keep moving.
If you're planning for a catastrophic failure you should really be buying that gold tho, precious metals, bullets, guns, fresh water, seeds.
Look up free land available for homesteading. There are several states in America that will pay you if you meet the criteria to move to them so that you can homestead and provide agricultural food. You don't need to be a farmer already, in some exceptions.
Stop using tech that supports or implements AI. Many people don't like something but still support the companies that do it. Stand on your beliefs and don't participate.
Start getting into self sufficiency.
I have no advice but I’ve been thinking the same way. I like LLMs, I use LLMs, but the “shove an LLM into every product and call it more valuable” approach is not sustainable and it will fail. Hopefully not as a full on bubble collapsing economy thing, but it’s only a matter of time (I’d guess a year tops) until companies have to start admitting to losses and investors start retreating.
Hopefully someone with some decent economic knowledge will drop some advice, but frankly I doubt anyone can do much better than guess (or parrot old advice) what will be least impacted. Intuitively tech stocks are the ones that will be hurt, maybe it’s manufacturing stuff that will stay more stable, but it’s all such a complicated web of interdependency who knows.
It also depends what you mean by “hurt.”
Nvidia/AMD stocks, for example, are going to drop like meteors, but the physical companies themselves will be fine. They’re like the picks and shovels makers of the California Gold Rush; they’ve made their piles of cash and will go back to business as usual. Hence, I’m not selling my long-held AMD, even though I’m certainly not buying more. Yet.
And some totally unrelated companies may be disproportionately hurt by the pullback of a serious recession.
One comment I will make on LLMs specifically is it’s more of a “race to the bottom” than you’d think. Between sparsity research (with the recent MoE trend being a rather crude stopgap if you ask me), alternate attention schemes, finetuning advancements, computing shifts like BitNet all in the pipe, and all the open models from China and others, well…
The end point feels like local inference of specialized, freely licensed models. As useful, niche tools, not superintelligence.
They're low power basically free, hence seemingly inevitable.
That’s utterly apocalyptic if you’re someone like Sam Altman or Jeff Bezos. OpenAI can’t make money off that, which is why they’re lobbying to kill it and preaching infinite scaling that won’t work.
Weird no one is saying this, but exchange dollars to Euros.
Had it been done back in November of last year, 1,000$ would now be worth about 1,200$.
Even if the Euro loses some value from the crash, it probably won't be greater than 20% of the exchange difference there is now.
I dont think this is why no one is saying this. But the reason you shouldn't do this is because of the Efficient Market Hypothesis. This is the same for basically any investment where you are trying to be "smart", whether you are buying gold, low tech stocks, various currencies, crypto, etc. The fact is, sitting on your ass and clicking a few buttons on an investment website takes literally no effort - which is why there are trillions of dollars in investment funds trying to do it as profitably as possible. Every dollar in the market is competing to eak as much value out of every minute in the market as possible, and these dollars are very smart.
Like, if you graduated top of your class from MIT in financial analysis, you are still at an unimaginable disadvantage, because the evil capitalist hedge funds hired all your classmates, and also all the equivalent graduates for the past 40 years where they have all been competing against each other that whole time. And they have shit tons of money to spend on the best tech they can possibly afford in order to make tiny improvements in trade returns.
You can exchange dollars and euros on the open market, which means the banks and hedge funds can do that too, which means that the anticipated difference between the two is already priced in.
Great points, currency arbitrage is not something the average Joe can win at, the money they have access to is already stepped on.
as someone from the EU, that's a dumb idea. the AI bubble will also pop here and we all know how well the EU handled the Greek financial crisis
Our economy isn't propped up by AI. One of the biggest AI's we have is Mistral, and it's no where near the size of the US ones.
Plus we don't have trade geniuses like Trump /s
our infrastructure is heavily reliant on Microsoft, Amazon and Google hosting services, all of which could go down during their financial turmoil due to their AI obsession
We have local providers too tho, and if they go down could give this EU ones a chance to move in, which could be good.
Especially since both Microsoft and Google are both quite in the AI stuff.
What is hte least friction way of doing that?
Revolut
I beg everyone if you swap currencies on fintech apps, open a real bank account with a normal bank. Revolut can arbitrarily withhold your money at any time unless you can afford a good lawyer to get it back
Revolut is subject to EU laws which are much stricter than US ones. It's not like Wells Fargo, an actual US bank, hasn't already messed with Americans by just straight up stealing from them. Wells Fargo would've been dead by now in the EU for their shenanigans.
look up the many people who had their money held up arbitrarily due to surveillance algorithms gone wrong. I couldn't access a small donation I really needed at the time because of this
I think its too late. The dollar lost 15% of its value from beginning of year... It doesnt look like it will go much lower. Its been kind of stuck for the last month.
If you have a retirement account, it's probably in some sort of stocks. Be aware of what those are. Consider including some non-American index funds that are not particularly tech heavy. S&P index funds are significantly exposed to AI-related tech companies, and their usual safety is currently questionable.
How did you handle previous stock market crashes, and why do you expect this time to be different? I’m heavily invested in the market, yet I’m not losing any sleep over the possibility of a crash - meanwhile, people who don’t even seem to invest are the ones worrying about it. I can’t help but wonder why that is.
If I had to guess it's probably because those people, like OP and myself, have very limited funds so losing that investment is losing "everything" and putting them back to having nothing.
Having a very inadequate income makes losing your investments tremendously impactful as you know it will take many many many years just to get close to whatever level of investment you had before. We're counting on years of growth to make it something worthwhile, but if we get kicked back to nothing then by the time we catch back up to where we were the amount of time left to invest and grow is so much shorter.
If you’re not invested in the stock market, you don’t lose anything when it crashes - and if you are invested, you only lose if you sell at a loss. I understand the anxiety around economic uncertainty after a crash, but I get the sense that many people don’t really understand how “losing one’s investments” actually works.
If someone is absolutely certain that a crash is coming, then now’s the perfect time to sell while we’re still at all-time highs - and buy the dip once the crash finally hits.
They certainly do if they have to draw cash at a loss after they, say, lose a job from a crash. Or draw because of inflation like we’re at a huge risk of now.
Other times, it’s big funds (like retirement funds) folks are “automatically” invested in that make some bad forced decisions during a crash.
You’re right, there is an unfortunate tendency to panic withdraw during a crash (that’s the idea, right?), but it’s not always a choice.
Of course a massive stock market collapse would affect regular non-investing Americans. When companies go out of business, when inflation kicks into high gear, that affects entire communities.
But exactly how, that's the question. If you know the answer to how, then you can easily prepare for it. Still, pretending that it won't hurt you because you're poor seems to be at odds with the past.
Saving to invest is hard, sometimes. And finance knowledge/attention is finite. Some folks are at risk of drawing from investments after a crash.
And not everyone here was invested during the 2008 crash, and may have only experienced the ultra-bizzare COVID rebound.
I don’t mean to be rude, but there are a lot of legit reasons most of Lemmy is probably not into ultra long buy-and-hold investing.
The Japanese stock market crash of 1987 only recovered in 2020. That's over 30 years.
If that happened in the US, the average american who invested in the stock market and is relying on a 401k to retire would be screwed.
I would say Japan never recovered. The yen is weak, the cost of living is skyrocketing, and Japanese people have said in large-scale national polls that they struggle more to make ends meet than they ever have. Also, the rich are getting richer, and there are far fewer permanent jobs than there were two decades ago.
The main issue in Japan during the 90s was that the government refused to acknowledge the reality of the situation and let the market crash. Instead of allowing bankruptcies and bad loans to clear, they propped up banks and corporations for years - freezing growth and causing decades of deflation and stagnation. The real lesson from Japan isn’t about the crash itself, but about the response: avoiding short-term pain led to long-term paralysis.
If an AI bubble bursts, it would probably resemble the dot-com crash more than Japan’s experience. Central banks act much faster now, bad debt gets cleared out instead of buried, and the global economy isn’t built entirely on AI speculation. So even if valuations take a hard hit, a decades-long depression like Japan’s is very unlikely.
I'm 54 and expect this to be the first depression of my life. It'll be like nothing we've seen since October of 1929.
You would have been prime working age for 2008 financial collapse. Though not an economic depression it hit peoples retirements and work prospects like a hammer. And then what happened? If you stuck it out and didn't paper hands you would be fine.
Non-US countries are buying gold, this seems to be a good way to go.
You could put a portion of your retirement in assets, things like gold, property if the taxes aren't crazy. Silver gold and copper can be a good asset if you can get it at market price and protect it from theft. Other things you can buy are used guns, collectables that you know will have more value that is higher than inflation in the future.
If you're worried about any economic downturn, you can very well diversify into even larger economic areas if you'd so please. How you do so is of course up to your own discression, given you can look towards different sectors, vectors of investment, and even geographic areas.
It makes me rage that even though I'm in a country thousands of miles away, its economy would be dragged down should economic collapse ever happens again in the US given heavy reliance on remittances from workers who are paid mostly in greenbacks.
The only glimmers of a chance of surviving such a catastrophe equivalent to tulip abuse would be not only investment in tangible goods and technical skills/trades -- short of becoming a prepper -- but also counting on policymakers' pragmatism to make my country more cooperative with its neighbors to cushion and weather the shock.
I wouldn't say the "entire US economy" is AI based.
Weird question. Not clear anything you can do.
First, AI bubble means datacenter bubble. Nvidida, AMD, TSMC, Chinese equivalents will do fine, as they have options to make products for non datacenter use.
Scenarios:
No mass corporate uptake for datacenters, or requirement to encrypt upload/download traffic to corporate owned models hosted by datacenters. Amazon/Google/MSFT can win relatively such a race if they allow private encrypted models instead of their own, and can buy distressed assets from failures. It just means slower than announced deployment rates, with only losers those datacenters who get married to losers.
CPU enhanced AI (knowledge graphs) with/or smaller LLMs. Datacenters can still provide corporate users, but mix of regular and gpu datacenters, Datacenters can lose big if next big thing requires replacing hardware, and they were too early. Shift in winners and losers, but not an AI/datacenter bubble.
Few of the announced datacenters are ever built, or 5 year+ delays. Public company investments will go down a little, but nothing catastrophic for big tech, who can make it up in other areas. Power company histeria is an associated bubble that does poorly. This is a very likely scenario.
Datacenters are successful and aggressively built. No AI bubble, because government surveillance revenue is obtained, and heavy government use of LLMs to keep population pro Israel/oligarchy/militarism. A freedom and jobs bubble is not better than an AI bubble.
Meme stock mania means even the biggest losers can rebound strongly. An everyone else bubble happens whether or not AI datacenters are successful.
Invest in Gold
You're catching downvotes, but according to Google Trends, searches for "gold price" and "ai bubble" are positively correlated, and there's plenty of historic precedent for people flocking to "safe haven" assets when the markets nosedive. Gold went up by 30% from Jan-Sep 2020 (COVID), and nearly doubled in value between 2007 and 2009 (housing crisis), although it did take a dip before rebounding during the dotcom bubble (2000-2003).
That said, I would recommend keeping a significant portion of your money in an HYSA as precious metals are subject to large fluctuations in price and markets don't always behave rationally.
Buy puts?