> What's the best way to hedge against this, considering many of us have significant savings in the market?

honestly, if you're >= 10 years away from needing that money (retirement or whatever) then the best hedge is to ignore the news and just keep contributing to your investment as always. I got caught up in a couple moments (tarif drama April before last was one) where i panicked and sold and then it only took a few months to get back to even meanwhile 18% of my capital gains were now due to the taxman. I wrote a check to the IRS for 10's of thousands for no reason except over reacting and ignoring every financial advisor's advice.

if you're going to need your investment money within 10 years then you need to get advice on how to start reducing risk (and therefore reward) because you don't have time to survive and repair from a crash.

Stay well diversified, keep investing each month, and take a nap.

There are almost surely severe bumps ahead for the AI space and that will likely spill over into the broader market. But unless you’re retiring in the next few years don’t worry about it. You can’t time the ups and downs and the only proven strategy is to just keep investing in a broad indexed portfolio and just ride out. You’ll take a short term hit but also end up buying on the dip because you don’t stop investing.

Hold short term debt (e.g money market funds or SOFR ETFs). Then you will have cash in hand if either stocks fall or yelds raise.

Never buy derivatives as a non institutional investor.

I thought that a year or two ago. Thankfully I did not. I have no idea how long the music will keep playing.

#1: Great question, and I would love to hear the answers (And am learning from the ones posted)

#2: What I've done so far: Haven't bought stock in a year. Have moderate short positions on Palantir, SpaceX, and Tesla. Have big short positions in the most popular Quantum computing companies. (Scams IMO). I have sold most of my positions ("profit taking"?) in stocks which have gone up a lot in the past year. (Nvidia, Broadcom etc), and am no longer using margin; about 1/3 of my brokerage value is now "cash", generating ~3% interest.

Just sell all your ETFs and buy them again when the market goes up or down. You're very likely to lose money with options and you will definitely lose a lot of money if you buy enough options to hedge your full exposure.

Wouldn't it be wiser to get out of the market into fixed rate assets like government bonds? Maybe have some into puts on SPY (or QQQ since tech would probably have bigger losses) too, but mainly getting out of long positions on what seems a really overvalued stock market

Bet on Chinese tech sector to eat everyone's lunch with cheaper, faster, smaller, open-weight models?

Reminder: Serious people have been predicting a market crash "within the next 3 months" for 3 years now. In that time, the "market" has gone up around 70% (66%-86% depending on the what part you are looking at).

A friend of mine and I go out to lunch every 3 months and talk about, among other things, investing. We've made a trope of it, calling out the people who are predicting an imminent market crash every time we have lunch.

I'm not saying that it doesn't look like it's going to crash, but I'll also say that there's also a very sizeable downside potential for getting out of the market.

What's the best way to hedge against this, considering many of us have significant savings in the market?

I dunno.

"The market can remain irrational longer than you can remain solvent"

Gold maybe? (no investment advice)

It's tempting to sell a bunch, but then you've got cash. What do you do with cash when the government keeps printing money and assets are all overpriced?

>A few puts on SPY dated a year or two out?

You think the hedge funds selling SPY options don't have this priced in already? Of course, you can still make money on this bet, just like you can win money at a roulette table, but unless you think have some special insight that hedge/quant funds don't have, buying options should be negative EV.

Doesn't Nvidia's success depend hugely on AI money pumping up demand for their products? If/when AI companies run out of money to keep investing in data centres, the bottom will fall out of the market and hopefully we can go back to buying reasonably priced graphics cards.

Other than having a nice management UI, what does Virtualbox do that qemu doesn't these days?

A financial bubble has almost nothing to do with how good the product is. It's about how much of the value the company can capture, and what the ratio of that capture is compared to the investment.

It doesn't matter to investors if OpenAI or Anthropic can build AGI if a year later 10 competitors have similar models and eat into the revenue. OpenAI and Anthropic needs years, if not decades, of significant market dominance, post-enshitification, to justify their investment spend.

This:

> Everyone in the tech and media world is dead set on this being a bubble.

is completely orthogonal to this:

> Yet, even now, Fable is able to do the work of 4-5 engineers when used by a single senior engineer.

The industry being in a bubble or not is irrelevant to the tech being good or bad. The dot-com bubble popped (and was a bubble) even while the tech was fit for purpose.

I think the "bubble" is more about return on investment and not usefulness of the technology. So much money has been invested on the assumption that so much return is going to materialize. The more money going in the bigger the expectation of return, that's the bubble.

> Yet, even now, Fable is able to do the work of 4-5 engineers when used by a single senior engineer. Teams can and will shrink.

If that's true or not, it's a bit irrelevant. Maybe teams won't shrink because of Jevon's paradox, or maybe tech debt will catch up.

But it doesn't matter because the people calling this a bubble mostly believe that the companies burning money cannot have the return on investment needed. This can be for a variety of reasons, but my favourite one is just that open source AI models are good enough, cost a fraction of what the frontier ones do (with predictable costs), can be fine tuned, and can be relied upon (no orange tweet banning your acces to the model you've been using). So for me OpenAI and Anthropic will really struggle to merit their valuations.

And then companies like Oracle are just a dumpster on fire. GPU hosting is a commodity business; expensive one, for sure, but there's no way in hell they'll make actual returns on the money burned with zero moat. And things are even worse when you consider the political involvement of the CEO and his nepo baby, which can easily burn good will.

Yes, but all bubbles (except the tulips...) have a real, valuable, new technology at their core. That it's amazing technology doesn't stop the financial side of it being a bubble. In fact it all but ensures it is.