The entire US economy is currently being propped up by growth in the AI/tech sector. And I am convinced that LLMs are fundamentally incapable of delivering on the promises being made by the AI CEOs. That means there is a massive bubble that will eventually burst, probably taking the whole US economy with it.
Let’s say, for sake of argument, that I am a typical American. I work a job for a wage, but I’m mostly living paycheck to paycheck. I have maybe a little savings, and a retirement account with a little bit in it, but certainly not enough that I can retire anytime in the near future.
To what extent is it possible for someone like me, who doesn’t buy into the AI hype, to insulate themselves from the negative impact of the eventual collapse?
So. I have been through the tech bubble and housing bubble and this got me to investigate the great depression and what I found is. No. I mean if your rich enough. Maybe. But things like real estate have reoccurring costs and things like gold you lose value in the buying in selling and its not liquid enough for you to deal with the economic situation you will have outside of investments. A normal person will have to use savings which include investments to get through it. Owning a home without a mortgage can be helpful unless you need to move for work. its complicated.
Look up free land available for homesteading. There are several states in America that will pay you if you meet the criteria to move to them so that you can homestead and provide agricultural food. You don’t need to be a farmer already, in some exceptions.
Stop using tech that supports or implements AI. Many people don’t like something but still support the companies that do it. Stand on your beliefs and don’t participate.
Start getting into self sufficiency.
I wouldn’t say the “entire US economy” is AI based.
I’d be more concerned with insulating yourself against the AI bubble not popping if I were you.
The good news is the strategy works for both scenarios. Hyperlocal renaissance or bust.
I am not an expert per-say on AI, but I have survived economic collapses. Kinda.
Here’s what you can expect.
It will happen a lot faster and more sudden than you expect. It will be a few days of “uncertainty” and you will see reports on the market and spending and fear through investors, and then BAM everything goes deep red for a few days and then you suddenly get sent home from work.
Your job, no matter how skilled or stable or unrelated to finance or the stock market you may think it is- is NOT safe. In fact, service industry jobs are often the first to go, because when the market tanks and investors start pulling out money, one of the first, strongest effects we feel is that people with money immediately stop spending. If you install windows and doors, if you cut grass, if you clean or cook, expect people will suddenly start doing that themselves more and more. You may get laid off suddenly depending on how much reserve your company has.
There will be an immediate and overwhelming strain on state and city services. Unemployment offices, food banks, employment centers, and expect the media to create a LOT of hype around it to a destructive degree, there will be the same kinds of supermarket raiding like we saw with covid for no real good reason other than people feeling afraid.
What you should do now to prepare:
Have backup income plans. Even if modest, have some hustles ready to deploy. Get certified or see what you need to get certified ahead of time to do Uber and/or Lyft, people are going to be using ride sharing more because they won’t be able to afford to drive or make car payments. Think about other services people are going to need if they don’t have jobs - handyman work on the cheap, dog and pet care, unlicensed work you know you can do safely, etc. If you or your family can do art and crafts, set up an etsy market now before you’re strained, open it up to international customers.
SAVE MONEY, have cash savings as well as bank savings, have gold too if you can swing it. Expect any accounts that are tied to investments to be frozen or even wiped out, such as 401k’s and the like.
Whatever you can do to reduce debts and spending - pay down or pay off credit cards or cars if you can. Get your finances in order as much as you can, so figure out exactly what you’re spending and what your margins are.
Stockpile canned goods and basic survival supplies ahead of time like it’s the goddamn apocalypse. Seriously, have at least a month of dry goods and preserved food, you have some time (maybe) so start collecting canned food, sacks of dried beans and rice, toilet paper and soap, other supplies you buy regularly. This will give you a safety net if it gets bad, it’s one less [major] thing to worry about as you shift around your expenses and priorities.
Get information ahead of time about where your local DES/unemployment offices are, and what’s required to apply. Find out ALL the programs you can apply for, from, nutrition assistance to grants to stipends or tax credits for whatever your family situation is. You won’t get through on the website, it will be crashed with traffic, so be ready to go stand in line with your paperwork. You will get some number of months of benefits if you qualify (requirements vary by state) and most likely after some political contention, congress will pass emergency funding for extensions and stimulus checks. But it won’t last forever.
Go visit your nearest food bank now. Bring them some food and socks, get to know who runs things so that when it’s your time to stand in line, they know you already and have good associations.
We don’t really know how bad it could get. So get a gun. There may be civil unrest at some point. Our world is about two missed meals away from anarchy, or at the very least crime will increase and homes will get broken into, and police will likely be understaffed and overworked. You will be on your own.
Buy puts?
Riding out economic ups and downs is really just about good personal finance. The good advice is the same in good times and bad, which is why it is good advice - in economics, you never really know when good or bad times are coming.
- Spend less
- Earn more
- Invest the difference
Your #3 is problematic.
The basis of the question is where to invest in order to avoid the coming AI crash. Your answer fails.
If you’re certain an “AI crash” is coming, then shorting AI companies is how you’d not only avoid the fallout but actually profit from it. That’s speculative investing though - basically gambling.
For everyone else without the ability to predict the future, the general advice stays the same: invest in low-cost, highly diversified index funds spread across sectors and regions. The markets are deeply interconnected, so it doesn’t really matter where you’re invested - when the market crashes, you’re getting hit. If you’re all in on tech, you’ll get hit hard; if you’re spread out, you’ll get hit less. But either way, you’ll feel it.
For someone in it for the long run, it doesn’t matter what the market’s doing. I just keep doing what I’ve always done - managing my finances carefully and investing my savings.
Right.
I will say also that if you want to hedge against AI, then you could invest in non-US based index funds.
Another option is to invest in something like real estate. Do the math and find something you can profit off of even with a down economy and you’ll be able to get your investment to ride out the hard times and earn in the good times. But similar to index investing, these investments should be made with an eye on long-term gains (on the order of decades).
A final option - possibly the best - is to invest in yourself. Put the money into good health (physical and mental), skills that pay dividends (like being able to cook or do your own repairs, or building a community around yourself of hard working, optimistic, and sensible individuals. Skills education can be a great investment - either going to a university (careful here with costs, but college graduates still do tend to have better lifetime earnings than non-graduates), a technical school (AI probably won’t replace plumbers for quite a while), informal self-teaching (you can learn a lot of skills just making personal projects at home or in a makerspace). And for the more ambitious, you can start your own business, which could be as simple as buying a ladder to clean people’s gutters or a snow plow attachment and truck to plow driveways and parking lots.
Hard times are coming - they always are. The people who do well in hard times are the ones with a diverse set of useful skills, a resiliant set of assets, a positive mindset, and a supportive community around them.
Shorting counts as income and you’ll be taxed on it as income. You also have a chance that no one will buy you out of the hole once it hits its mark.
Lots of risks in shorting.
While I agree with diversifying, the tariffs are fucking over the stock market hard in so many ways you cannot avoid it. Right now everyone sold their gold cuz they need money, And two days ago the tariff on China created a ripple on the precious metals. Tomorrow trump will fart some blithering assanine remark and suddenly for whatever reason lithium will take a dive for it.
Investing has become a stupid stress game.
I guess up your international market fraction (?)
…Tariffs affect other countries stock so you’ll get the same swing on the international. Im not sure you’re understanding how stocks work and maybe you’re just saying buzz words? Well… Either way, op is worried and they have a good reason to worry. They are educated enough about stocks to be worried. You…. You not so much.
Be nice!
US tariffs don’t exclusively hurt other countries stocks. You can compare an international domestic and emerging markets index fund to US domestic ones and see quite a divergence. The one I’m familiar with, ACWI, is up 21.8% YTD.
So getting to the point: I’m not sure of the point you’re making here as the reference you’re using is all domestic funded in the US. You didnt provide the comparison to the international. And the point of the post was that the going up is the bubble OP is worried about. You’ve done nothing more than establish what was already the fact OP was posting on. We are well past this.
If youre laying down information I’m checking it because there’s a lot of misguidance and misinformation online. If you think it’s not appropriate to call it out then you have a big problem here. I’m not going to apologize for being a critical thinker and you’re just going to have to figure out a way to live with that cuz compromising myself isnt going to come at the cost of approval from random strangers online.
As far as politeness: so far you’ve not posted in good faith. And so I owe you nothing. Now you may proceed to clutch your pearls.
Truth of the matter is that predicting and determining when the stock market crashes or if a recession already happened is hard. Saying definitively “there were warning signs and I should have sold my shares” is hindsight bias. When COVID happened, everyone thought that a recession will occur and pulled out their investments. The COVID-induced recession didn’t happen and we have come with a better economy than before thanks to good handling of the economy by governments across the world. Those who sold their investments have to re-buy their shares but it is now at higher price than when they previously bought, and they missed out on potential higher profit had they stayed.
Of course, the world is not black and white and not all circumstances are the same. It is always a case by case basis and there are variables always at play. We came out well after COVID because we know that we definitely had a good leadership back then. But with economy under Trump, there is a higher chance of recession happening for obvious reasons, not just with AI bubble burst. In that case, it is still bad idea to sell all your shares because you would have to re-buy them at now premium price, but you could diversify your investments to safer countries or sectors in preparation for the high likelihood of a market crash. I have divested from US stocks and bought more European and Japanese ones, and invested in energy sector because it is more resilient even during economic troubles. I might have to rethink about my US healthcare stocks, however.
where and how to invest, most people dont have that knowledge. also migrating to other countries isnt easy to.
If you’re certain there’s an AI crash coming then you could make a lot of money betting on it. Put your money where your mouth is and become one of the billionaires.
You could also just not invest money in AI companies.
If you have a retirement account, it’s probably in some sort of stocks. Be aware of what those are. Consider including some non-American index funds that are not particularly tech heavy. S&P index funds are significantly exposed to AI-related tech companies, and their usual safety is currently questionable.
Weird no one is saying this, but exchange dollars to Euros.
Had it been done back in November of last year, 1,000$ would now be worth about 1,200$.
Even if the Euro loses some value from the crash, it probably won’t be greater than 20% of the exchange difference there is now.
What is hte least friction way of doing that?
Revolut
I beg everyone if you swap currencies on fintech apps, open a real bank account with a normal bank. Revolut can arbitrarily withhold your money at any time unless you can afford a good lawyer to get it back
Revolut is subject to EU laws which are much stricter than US ones. It’s not like Wells Fargo, an actual US bank, hasn’t already messed with Americans by just straight up stealing from them. Wells Fargo would’ve been dead by now in the EU for their shenanigans.
look up the many people who had their money held up arbitrarily due to surveillance algorithms gone wrong. I couldn’t access a small donation I really needed at the time because of this
I dont think this is why no one is saying this. But the reason you shouldn’t do this is because of the Efficient Market Hypothesis. This is the same for basically any investment where you are trying to be “smart”, whether you are buying gold, low tech stocks, various currencies, crypto, etc. The fact is, sitting on your ass and clicking a few buttons on an investment website takes literally no effort - which is why there are trillions of dollars in investment funds trying to do it as profitably as possible. Every dollar in the market is competing to eak as much value out of every minute in the market as possible, and these dollars are very smart.
Like, if you graduated top of your class from MIT in financial analysis, you are still at an unimaginable disadvantage, because the evil capitalist hedge funds hired all your classmates, and also all the equivalent graduates for the past 40 years where they have all been competing against each other that whole time. And they have shit tons of money to spend on the best tech they can possibly afford in order to make tiny improvements in trade returns.
You can exchange dollars and euros on the open market, which means the banks and hedge funds can do that too, which means that the anticipated difference between the two is already priced in.
Great points, currency arbitrage is not something the average Joe can win at, the money they have access to is already stepped on.
I think its too late. The dollar lost 15% of its value from beginning of year… It doesnt look like it will go much lower. Its been kind of stuck for the last month.
as someone from the EU, that’s a dumb idea. the AI bubble will also pop here and we all know how well the EU handled the Greek financial crisis
Our economy isn’t propped up by AI. One of the biggest AI’s we have is Mistral, and it’s no where near the size of the US ones.
Plus we don’t have trade geniuses like Trump /s
our infrastructure is heavily reliant on Microsoft, Amazon and Google hosting services, all of which could go down during their financial turmoil due to their AI obsession
We have local providers too tho, and if they go down could give this EU ones a chance to move in, which could be good.
Especially since both Microsoft and Google are both quite in the AI stuff.
Lots of reasonable personal advice here. I want to suggest some community driven ideas, though they’re less fleshed out than I’d like.
Look into community and common gardens (and if they don’t exist, start pushing for a local org to make such space). If you are renting, look into tenants unions (or consider organizing your own).
Invest some in food kitchens + homeless shelters now, while you’ve got something to share. Consider volunteering and becoming more familiar with the resources (you may not need it, but others could).
Consider broader political organizing. The people in power (even in local positions!) when the crisis hits will definitely matter. America gave big buy-outs to businesses during previous crashes; but it could payout to citizens just as easily. Lookup and start discussing policy solutions that could help insulate you and your community. Bring this up at a city council meeting. Write a county representative.
I will be the contrarian in the room and say that you shouldn’t really do anything different – unless you know that you are going to need that money in the next year or two.
Let’s take the S&P 500. Yes, we know there is an AI bubble, and the same 7 tech companies are knee deep in it. But it turns out that bubbles make money, until they don’t. In fact, a good chunk of the growth in the S&P over the past two years has been in those 7 companies.. If you had made this bet 2 years ago, you would be a big loser now.
So what do you do? Don’t panic sell. You can’t time the market. Sell when you need the money for something else. Sell when you have a purpose. But don’t be too upset when the bubble finally bursts, and it all dives 25% (or more!) . That was never real money anyway.
Here, OP is asking about their situation even if they have almost no investments. In other words, they’re asking about the downturn on the national and global economy, and how that could make their life bad. Since it obviously can (through, for example, job loss or difficulty obtaining groceries), then some amount of preparation might be reasonable.
Another good question is what to do if you have medium-size investments and you don’t want to see them tank. That’s what you are talking about.
“That was never real money anyway.” Rich people sometimes say that, but everyone else knows you’re wrong. We save a percent of our paycheck every month to make sure we have money for retirement. We all wish we had guaranteed benefits, but that system was scrapped by greedy rich assholes decades ago, so now we are gambling that our savings will increase, because if they don’t, we’ll be working until the day we die… So if we feel like that money is real, maybe we’re right.
And if you feel like the money isn’t real, can you give it to us? Couldn’t hurt, after all, because it’s all fake.
I believe they’re referring to stock money not being real money since regular citizens have no power over whether that money disappears overnight or not. only billionaires do. nobody is criticizing your personal savings and idk why you’d take it that way. although during depressions that money might become inaccessible as well due to mass cash withdrawals
Normally I would agree.
But the weight of this one obviously hyped sector is measurably, historically huge: https://www.apolloacademy.com/wp-content/uploads/2025/09/ExtremeAIConcentration-090825.pdf
With a lot of “circular investment” reminiscent of previous bad behavior: https://www.axios.com/2025/09/25/nvidia-openai-investment-ai
Obviously don’t sell after a crash, or sell the absolute least you can to live; that is rule #1.
…But I think it’s prudent to save a bit extra and shuffle some investment out of the S&P 500 pre-emptively, as it’s starting to resemble an AI evangelism hype fund. I’m not that old/experienced, but I’ve never seen anything like this in the market, especially from my perspective in the ML tinkerer community where, ironically, it’s obvious how much this all stinks. All the academics know it.
Risk tolerance is definitely a thing and I’d argue being all in on the s&p500 is already poor diversification. Global broad market etfs would fare better. The worst thing to do regardless of tolerance or portfolio is selling at crash.
If you’re worried about any economic downturn, you can very well diversify into even larger economic areas if you’d so please. How you do so is of course up to your own discression, given you can look towards different sectors, vectors of investment, and even geographic areas.
It’s also funny how Lemmy is buying up this narrative.
The entire US economy is currently being propped up by growth in the AI/tech sector.
What’s happening is that Dementia Don is curb-stomping the US economy. AI investments, mainly in data centers, are the only thing that still seems promising. When you are on a trek and someone leads you through Death Valley, while pouring out all the water, you shouldn’t blame the last horse that still keeps going.
Putting the blame in the right place would certainly help, with a view toward the mid-terms.
Financially: Diversify. Make sure that you are not completely dependent on what happens in the US. But mind that Europe comes with its own imponderable risks (ie Putin). Same with China. Maybe some old leader dies and the new crew runs everything into the ground; they go to war with Taiwan, that sort of thing.
I don’t know that the OP or anyone else necessarily disagrees with you here. It’s one of the reasons that I believe we’re fucked when the bubble pops. Every other sector is shrinking otherwise, which is only making the mania more extreme.
Trump has fucked the economy, but I don’t expect the next administration to be able to pull off a miracle and fix the mess we’ve created within the next 10 years. Foreign relations and our status as the reserve currency are shot to hell. The US is going to have to answer for our behavior.
Those last two sentences are very alarming for anyone paying attention. The dollar bond market is currently collapsing, and we were THE defacto world power because of our soft power. Farmers around me are currently paying the price at China is buying up all the cheap land they can, and although I call them my friends,I can’t help but feel a certain schadenfreude as I told them trump was evil 8 years ago and the only comeback they have is “but other countries were scared of us then!”. Like their entire lives are nothing but a zero sum game, and now they can’t sell their soybeans. I may be a terrible person, but at least I can read the tea leaves.
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 *are no general rules, 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. They’ll grow however long the bubble goes, and keep growing after.
an ounce will remain an ounce
Buy cocaine futures, got it.
An ounce just isn’t the same anymore with all this inflation
Shrinkflation is ridiculous, you’re lucky if you even get 25 grams now. /j
I don’t know about you but an ounce never remains and ounce you cut that shit make two ounces then someone else does the same and sells it as grams
cocaine prices actually went down due to trump/noem pulling CBP off the borders to support ICE.
Invest in Gold
You’re catching downvotes, but according to Google Trends, searches for “gold price” and “ai bubble” are positively correlated, and there’s plenty of historic precedent for people flocking to “safe haven” assets when the markets nosedive. Gold went up by 30% from Jan-Sep 2020 (COVID), and nearly doubled in value between 2007 and 2009 (housing crisis), although it did take a dip before rebounding during the dotcom bubble (2000-2003).
That said, I would recommend keeping a significant portion of your money in an HYSA as precious metals are subject to large fluctuations in price and markets don’t always behave rationally.
