This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?

Do you live in a home you own with no mortgage? Do you have a fully electrified home, only EVs, and enough solar to run those things? You can make real concrete capital investments instead of abstract financial ones to reduce your required living/"operating" expenses, insulating you somewhat from the state of financial markets.

Same thing as always. Stick with your plan and rebalance if you need to. If your plan is 80% stock 20% bond (or whatever ratios), and the increased stock prices are putting you significantly out of balance, then sell your stock funds and buy bonds to put it back to where it should be. If the crash happens, sell your now too-high bonds and buy stocks. Or just buy into one of those funds that does all this for you, or hire a fiduciary financial advisor to do it for you.

Land/housing/property, as directly as possible and reasonable. Just make sure you don't do it in an overheated place like New York.

In a crash everything gets positively correlated for a while. You can go to cash temporarily but of course no one can consistently time the market.

With even the SP500 being super concentrated in AI-exposed companies, probably a combination of bonds and foreign equities. But hedging does mean being OK with watching any (perceived or real) bubble madness continue. I wanted to put all my wealth into Apple circa 2005, but chose not to because blah blah blah diversification. Obviously I wish I did, but I'm ok with the perfectly sensible decision I made - and I'd be retired many times over had I done it.

Personally speaking, as somebody that was 100% in equities until earlier this year (I'm in my early 40s and had most of my wealth in VOO), I shifted to a 60-40 portfolio - there are ETFs that maintain the balance for you. I did this knowing full well that this could attenuate my upside, but I figured it's worth it than being so concentrated in a single part of an industry (AI within tech) and so much upside was already acquired up until that point. Also, I figured the chances of the 2nd Trump term adding to volatility weren't going to help tamper volatility. On top of that, my income is tied to tech, so diversifying away further from it is sensible (especially the equity parts of my compensation).

But if you're in your 20s, your nest egg is likely small enough that I'd just continue plugging away in automatic contributions. Investing at all is far more important than anything else at that stage.

AAPL is chronically undervalued, and at the same time derives no revenue from generative AI.

It's more complex than that, a summary of my highly subjective understanding:

1. AI companies manage to build AGI and achieve takeoff. I have no idea on how to hedge against that.

2. The market is not allowed to crash. There will likely be some lag between economic weakness and money printing. Safer option is probably to buy split 50% SPY and 50% bonds. A riskier option is trying to time the market.

3. The market is allowed to crash. Bonds, cash, etc.

Depending on what you believe will happen and risk appetite you can blend between the strategies or add a short component. I am holding #2 with no short positions in post-tax accounts and full SPY in tax advantaged accounts.

Commodities.

Cash or bonds I assume

US government bonds

You can't hedge against a whole market. And you can't time bubble pop events anyway. You can dump NVDA today, sure, because it's overvalued at $180. And most of us agree. But that won't prevent it from going to $300 before it pops (which is totally reasonable too!), so dumping it today might hurt as much as it helps. Run-ups at the end of a speculative bubble are by definition irrational and produce in-hindsight-ridiculous numbers.

If you're young and invested for the long term, just leave all your junk in broad index securities. You can't do better than that, you just have to ride the bumps.

On the other hand, I'm approaching retirement and looking seriously at when to pull the trigger. The aggregate downside to me of a large market drop or whatever is much higher than it is to a 20-something, because losing out on (to make a number up) an extra 30% of net worth is minor when compared to "now you have to work another three years before retiring" (or alternate framings like "you have to retire in Houston and not Miami", etc...).

So most of my assets are moving out of volatiles entirely.