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Comment by nick__m

8 hours ago 

  It will be worse than the dot com bust.

If you believe it will happen in the next 6 months how do you prepare for that?

10 comments

nick__m

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pc86  8 hours ago

If you truly believe this, slowly divest everything into cash, wait for the crash, then buy back in. Even buying in slowly over the course of a crash, on the way down, will save you a ton of money if you're out before it hits.

But you're more likely to just cash out early, lose a bunch of gains, then buy back in later at higher prices.

If you can time the crash you can make a shitload of money. But you can't, so you'll come out better if you just keep buying in every paycheck and ride it out just like you have been.

  • RyanOD  7 hours ago

    Yes to this. Take no alternative actions. Just keep investing and don't watch the market for a year or two.

    • ares623  4 hours ago

      There is the separate risk that Microsoft, Google, etc. will have a lower value in two years as governments get their migration off their platforms into full gear

  • wing-_-nuts  6 hours ago

    It doesn't have to be 'ride it till it dies' or 'sell everything'. The AI bubble is almost exclusively contained to the US stock market and a few east Asian manufacturers.

    You're right that selling everything and 'going to cash' would be a mistake, but diversifying away from US large cap growth absolutely wouldn't. I'm 60/40 stocks/bonds. My stocks and bonds are 50/50 us/intl. ~ 10% of my us portfolio is small cap value.

    What's funny to me is that nobody learns from the past. This is far from the first tech bubble we've had even before the .com crash (canals, railroads, radio...). The answer, every time was diversification.

    • zozbot234  6 hours ago

      The east Asian semiconductor manufacturers are selling shovels in the gold rush and being very cautious about expansion given how capital-intensive the whole sector is. It's hard to come up with a scenario where they outright lose, even with the bubble popping.

      1 reply →

marcyb5st  4 hours ago

Invest into stuff that people will need regardless of the bubble popping like medicine, food, internet access, energy, ... . Stay away from luxury/travel stuff.

Also, during a crash there is the so called "flight for quality" where people cash out from risky assets and invest in stable ones that can weather the storm. So, try to invest in assets that are A or above (https://en.wikipedia.org/wiki/S%26P_Global_Ratings). The chart is for countries, but analysts grade companies as well in case you want to stay away from treasuries/national bonds.

Also diversify geographically. US will likely take the biggest hit if the bubble pops, so perhaps European markets that lagged behind in adopting the technology are safer (IMHO).

Personally, I am preparing by moving money from growth items to stable ones a bit at the time. To diversify even further I am using ETFs that, in addition to what mentioned above

1) pay dividends (whether these distributed or reinvested doesn't really matter) 2) are denominated in or hedged in safer currencies (CHF especially, but also Euro)

You definitely get smaller returns, but the name of the game is to maintain what you have, not to make heaps of money.

Finally, I am not a financial advisor, so do your own valuations/risk assessment analysis.