On almost every financial news outlet pundits are saying that the market is overpriced. Technology and AI companies have bid up stocks primarily on the speculation that AI will change the world. However, even if AI does change the world no one has quite figured out how to make it profitable. Also many critics argue that computer hardware for AI will need to be renewed and updated every 4 years making current investments void in short time.
The overwhelming majority of my investments is in the S&P 500 which is overweighted in the Magnificent 7 (the largest technology stocks). Just a couple of days ago politician AOC was commenting how largely the US economy and stock market was dependent on AI’s success.
Though I’m concerned with this development, I am going to stay invested and keep on the same path. There is an old theory that the market will adapt and adjust to known issues like the AI concentration. However, it is the unknown black swan events like the 2008 financial crisis or the Covid epidemic that are the real threats to the market.
For anyone in retirement like myself, I would have a year or two of expenses in a bond index fund to help smooth the ride if the worst happens. If you are still accumulating shares then view any downturn as an opportunity to buy the same shares cheaper than usual.
Millionaire Librarian 