Now the risk is a massive stockmarket wide collapse. Over a third of the S&P 500 is AI heavy tech stocks. With how reliant Nvidia is on AI compute sales, there's a real risk that at least 7% of the market disappears instantly, and everything else will hurt massively as well.
You can't hedge against that. There's a good chance this will have contagion solely from the sheer size of a dotcom style crash in our current stock market. Pension funds would start selling off their unrelated assets to cover their losses.
Nevermind any secondary concerns; How balls deep private equity and private credit are in AI. How useless the current US administration is at both economic and monetary policy.
Not by shorting individual stocks, but you can by deleveraging in general. Stop using margins or options, hold a larger portion of your money outside the blast zone like account balance (hopefully with interest), bonds, international.
It’s a big risk and that’s why there’s a big fuss right now to keep these guys out of the index.
Tesla doesn't drag everyone else down.
>50% of the S&P 500 is involved with these AI providers. There will be a cascading effect.