Investment Q&A

While a bubble pop would not be good for markets, investors we think would allocate capital to other sectors. Value stocks would do better, at least relatively. Utilities, health and consumer staples would likely hold up better. We do not think the bubble will burst this year. Spending on AI on average (based on company guidance) is actually accelerating and is up about 60% on average versus last year. We would also consider valuations. A company such as NVDA of course has risen sharply. But, on a forward earnings basis, it is cheaper than it has been in some time. This does not prevent a bubble pop from happening, but things would be worse if valuations were different. Stocks have risen, but in many cases earnings have risen faster than stock prices. Put options are very expensive, and of course expire. Instead, we might use a single leverage reverse ETF such as PSQ. Fees are 0.95%, but at least it does not expire. It also (currently) pays a distribution.