Before we get into it: Please focus on discussing risk management & positioning in regards to the luring burst of the AI bubble and refrain from arguing that there is no bubble - in the interest of this subs actual purpose.
Certainly nobody knows **when** the AI bubble will burst, yet it is quite obvious that it has to - probably sooner than later. The market is burning hot, the Buffet Indicator is through the roof and valuations aren´t just stretched anymore: They are batshit crazy and often just psychotic. We see so many symptoms of the final phase of any bubble, for example the insane amount of IPOs launched, and of course the pinnacle of market insanity as in SpaceX and comparable cash-burning, high-risk, zero-gain type of promises. You might still think: "Everything is going great!" Yeah - until it isn´t.
Taking into consideration the exuberance and the market´s recent detachment from reality, the question is: How to prepare for the inevitable? I am not so much asking about speculation regarding the actual price decline in % - a correction could be a meagre -20%, but also a solid -80% depending on your personal portfolio and allocation.
The S&P500 is off the table: Barely any diversification anymore, insanely tech heavy - basically a bubble-ETF at this point.
World Index Funds: Fair, but again with a rather long timeline.
As far as resources go: Gold and silver still highly overvalued, with no tangible value attached to it in the sense of: Gold and silver generate no cashflow or profit.
Personally I am not well educated about oil, so as it goes with value-investing: Don´t buy what you don´t understand fully.
Anyway: What do you folks do to protect yourself from the threatening correction? What is your strategy? How do you structure your portfolios and what buckets do you have?
Looking forward to exchange ideas here.
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Notabene: For me, I am holding on to almost none of my older positions now except from notable SaaS companies. Europe-based, of course, given that I´d rather trade some odd 2% of gains for stability and detachment from the USD. Not just because of the Orange Man doing his thing, but mainly because of the insane pressure resting on the USD and US stocks being generally overvalued as hell. Add the demographic shift and the risk of tons of people liquidating in the next 5 odd years. We are just talking retail investors here, not institutional investors. Expect those to also sell eventually - and as it goes, we just cannot be as fast as insiders. About the SaaS still: I am into companies providing governmental structures with software solutions. Tax offices and other administrative departments won´t just transfer from a well-working infrastructure to something else that poses security risks. Or even might cause severe data processing delays while millions of people simply have to do their taxes. AI will not replace this - at best, AI will be implemented to streamline already existing infrastructure.
Looking forward to your replies. What are your "safe havens"? What sectors are you researching and why?
(As usual: No financial advice, just personal opinion)