Comment on Is there any way the average American can insulate themselves from the AI bubble bursting?
cAUzapNEAGLb@lemmy.world 5 months ago
Hard assets make a lot of sense when paper assets do not.
Real estate and precious metals are the traditional hard assets. The stock market can implode, but a home will remain a home, an acre will remain an acre, an ounce will remain an ounce.
There are difficulties and risks and efforts required with hard assets, theres a reason why soft assets developed, but when things go wrong people trust what they can hold and walk on - and thus seek real estate and precious metals as they are certain and tangible.
With a little more trust in the system, there are softer assets available such as bonds, specifically treasury bonds, and there are etfs that attempt to exclude the ai bubble such as XMAG, or the sp500 but equally distributed instead of by market cap which increases diversity like RSP to reduce the fallout of the ai bubble pop
Theres a million ways to navigate a bubble, do the research and find confidence in your plan, and think about how you’ll react in various scenarios, especially when the numbers go down or arent going as high as expected
Real estate
I saw that you put a caveat in there about it, but I’m going to make it a little more clear.
If anyone here has lived through the dot.com bubble in Seattle (and probably the bay area), they’ll have seen that real estate is great if it’s paid for. If you go underwater on your loan and kicked out, which is how the banks got so much real estate in 08, you’re fucked. There’s not general rule, but guides.
In general, investing borrowed money is risky… People just don’t realize they’re doing that when they take on a mortgage.
This reminds me that I wish there was a basic course on money and the systems around it, that explains everything like you just did. It’s not magic, but it’s obfuscated behind so many terms and people trying to sell content, that it’s not a simple thing to figure out on one’s own.
Real estate is a trouble prone investment normally, much less in this crazy market; I specifically wouldn’t want to touch that right now.
Can’t speak for metals, but also be careful there…
Thing about a bubble like this is you don’t know when it’s going to pop. I like the saying “the market can stay irrational longer than you can stay solvent.”
What I’m saying is to be careful about going all in on more pure hedges. If this lasts another 4 years and one’s into stuff like XMAG and metals, and they drop in a crash anyway, you may end up in a worse position than if you had held the S&P 500. I think a better perspective is to avoid “buying a hedge” and instead invest in companies (or other assets) one thinks will be productive and grow with the bubble or not.
tanisnikana@lemmy.world 5 months ago
Buy cocaine futures, got it.
Tollana1234567@lemmy.today 5 months ago
cocaine prices actually went down due to trump/noem pulling CBP off the borders to support ICE.
Bocky@lemmy.world 5 months ago
An ounce just isn’t the same anymore with all this inflation
Cevilia@lemmy.blahaj.zone 5 months ago
Shrinkflation is ridiculous, you’re lucky if you even get 25 grams now. /j