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US economy in general is starting to make me nervous. Quite hard to diversify away though because that means missing out on AI boom and if the US shits the bed

• rkomorn 1y ago
  Yeah, I really don't know what scenario leads to the US economy not dragging down the rest with it. Is there an argument that other economies would recover better than the US, in the long term? But at that point, one could just diversify during/after the crash.
  • toomuchtodo 1y ago
    Not investing advice. I diversified away from the US to international equities VTI -> VSUX starting at the beginning of the year. My thesis is that trade is rearranging due to US trade policy. If you look at the S&P500, growth has been flat since 2022 for anything that isn't Big Tech AI bubble. Therefore, I believe that between go forward US economic policy and global trade reconfiguration, non US will outperform the US over the next five years.
    • rkomorn 1y ago
      Maybe not investing advice but reasonable-sounding nonetheless.
    • matwood 1y ago
      I also adjusted some towards VXUS which was a great move in hindsight from fx alone. I bought property in the EU a couple years ago which is also benefiting from fx moves. With that said, the biggest US companies are pretty exposed internationally already. I'm not sure someone needs to or it would be prudent to say dump VOO and move to VXUS 100%.
      • toomuchtodo 1y ago
        Agreed; to be clear, I still have US equities exposure, but it has been reduced to <50% of my total securities portfolio. This balances, imho, potential gains with managing risk around valuations. "Be fearful when others are greedy."
    • mamonster 1y ago
      The thing is, if you accept the Trump Tariffmania (and the associated move to balance trade and export more), then the dollar would have to continue lower, so you (as a US investor) would benefit just on that thesis alone. It's the reverse for EU investors, where you have to now accept pretty big currency risks to ride the A.I train (If you add in the EUR/USD rally I think you're flat to negative on your SP500 as an EU investor for example).
  • adeelk93 1y ago
    Which economy would you bet on, though? To recover in the long-term. In my mind they all give me reason for pause for various reasons
    • rkomorn 1y ago
      No idea, personally. My question in the second paragraph was definitely not rhetorical. :)
  • Esophagus4 1y ago
    Unfortunately, that seems to be happening already. YTD, US equities have underperformed most other equity indexes. The argument is that a weakened dollar, political / economic unpredictability, politicization of the fed, and big spending bills are starting to weigh on investors’ minds. Personally, I don’t think a dramatic “crash” is the most likely outcome. I think it would look more like a slow erosion of US growth and dominance compared with other economies. https://www.bloomberg.com/news/articles/2025-10-11/a-great-year-for-us-stocks-not-compared-to-rest-of-the-world https://www.bloomberg.com/news/articles/2025-10-11/a-great-y...
    • rkomorn 1y ago
      Yeah I kinda regretted writing "crash". Your comment lines up with my sentiment, though I don't put a ton of stock (pun somewhat intended) in mine due to "amateur" status. But I guess the "if not US, where?" question remains for me. Diversity "everywhere", try to be smartly selective?
      • Esophagus4 1y ago
        I am not a CFA, and this is not financial advice (and I believe you learn what people really believe by what they hold, not what they say :) ) So telling you what I hold: I’m long the market, mostly in US equities (60%), developed economy international equities 20%), and intermediate term US bonds (20%). My investment horizon is 20+ years, so in general, I don’t pay attention to the short term vol.
        • rkomorn 1y ago
          That's not too dissimilar from mine. I have cash I need to invest. I'm not looking to change any of my existing investments, so it's more a question of what the right move is there, with the wrinkle that I now live in the EU (again) after spending my whole adult life in the USA. I don't believe (or have interest) in making any short term moves. I don't think I need to (and feel very fortunate). We have the same 20+ horizon, but I guess the crux of the issue (and the point of my initial entry into this thread) is: how different do I think the world will be in 20+ years, and even if I'm confident it'll change, do I know what it'll become to make the right moves now? I don't think I do (and I'm somewhat skeptic anyone else really does either).
• bamboozled 1y ago
  You'd be crazy not to be nervous about it from what I've heard, seen and read in the last 6 months.
  • _zoltan_ 1y ago
    [flagged]
    • AnimalMuppet 1y ago
      "Nervous" does not equal "sure that it's going to go down".
      • rkomorn 1y ago
        Or even "sure what the right move is".
      • bamboozled 1y ago
        Yes I didn't mean it's certain to be ruinous! But wow, things have changed fast.
    • hash872 1y ago
      Why do people persist in repeating this dumb meme? Tyler Cowen, who should really know better, does it too. To be profitable shorting, you have to not only be right about the direction of the market but you have to time it precisely. Shorting is not 'I think the market is going to decline at some point in the future', or else we'd all do it. You're borrowing to short, and your broker can call your loan at any time for any reason or no reason at all, including 'our risk algos felt nervous this afternoon'. If you try to short a stock or ETF and the market surges in a dead cat bounce before declining, you get completely wiped out even if you're going to be eventually right
      • matwood 1y ago
        I going to defend Zoltan here and say the comment they responded to had about the same level of thought. "I read the market is overvalued" is no different than asking about short positions. I've been reading about the market being overvalued for like a decade at this point, meanwhile we've had the longest bull market in history. I feel for all the people who have been sitting cash all this time because they heard somewhere things were overvalued.
• SideburnsOfDoom 1y ago
  This AI Boom? https://www.scottishfinancialnews.com/articles/imf-and-bank-of-england-warn-of-ai-driven-market-correction https://www.scottishfinancialnews.com/articles/imf-and-bank-... Avoiding it seems wise.
• boplicity 1y ago
  Cash is safe. Gold is at a record high for a reason. There are still some companies worth owning. In general, the thing to look at is the level of liquidity in the market. The liquidity is there, but the problem is there's too much uncertainty for many companies to be able/willing to invest, so it mimics a lack of liquidity.
  • tmountain 1y ago
    The dollar has really taken a beating though. It has fallen ~11% this year and is predicted to fall another 10% next year. If you're in cash, you're basically betting the market is going to fall over 20% between the beginning of 2025 and the end of 2026.
  • AnimalMuppet 1y ago
    Cash is safe only if you ignore inflation or foreign exchange.
  • dangus 1y ago
    Don’t spread this kind of financial illiteracy. Cash is worse than even the worst observed scenarios of stock market investing. E.g., cash is worse than if you had bought your whole portfolio with the worst timing possible like right before the 2008 crash. I calculated this out comparing typical savings account APY with S&P 500 and the break even recovery of the S&P account is 2013, with annualized returns at 7.4% for your investments versus 2% APY for cash. That means your cash account is less than half the size of your investment account by 2024. And this is the worst case scenario with a massive market crash and the entire portfolio purchased at the exact wrong time - very unlikely, most people invest continually over time. The only purpose of cash is for immediate liquidity. People who invest in the stock market expect large fluctuations including major market crashes. That risk is baked in to the expectation of long-term reward. If you need to stabilize your portfolio to prepare to withdraw from it soon and preserve its value, talk to a professional if you don’t know what you’re doing. They probably won’t recommend 100% cash deposits unless you’re literally spending it all this year.
  • matwood 1y ago
    Cash is absolutely not safe. Between the fx risk and inflation risk out there, cash is losing purchasing power daily. Gold is interesting because it was a hedge for a long time, but with the recent run up I wonder if it's entering meme territory. Now that it's moving, people are jumping into it.
• tmountain 1y ago
  You can hedge with PUTS, move into precious metals, put your money in CHF, etc. There are all kinds of ways of maneuvering financial turmoil (albeit, sometimes with non-productive assets), but it really depends on your risk outlook, and as we all know, we're bad at predicting the future.
  • Havoc 1y ago
    >You can hedge with PUTS Alas can't - employer prohibits any use of derivatives. Plus my last adventure down that lane didn't go great. (Some big wins, some big losses and a realisation that I better leave things I don't fully understand alone - like the options greeks).
    • tmountain 1y ago
      Of course you have to do whatever makes sense for you, but nothing is stopping you (or anyone) from spinning up a Fidelity account and hedging against whatever is driving your 401k, etc. Portfolios don't have to exist as monoliths.
    • jjav 1y ago
      > Alas can't - employer prohibits any use of derivatives. What kind of employer is that? Employers often block you from trading derivatives of the company you work for, but how could they have any say on other stocks?
• vintermann 1y ago
  Too big to fail, nation state edition? But yeah. I looked at how my pension funds are invested, and it's like 70% in the US. Even more than the sovereign wealth fund, which is apparently around 50% (if a quick AI search can be trusted). Thing is, I'm not sure I will like the world where OpenAI and co. are as wildly successful as their valuation suggests either. So maybe I should invest in them, so that if it comes to pass, I at least have money?
  • dangus 1y ago
    I wouldn’t worry about being 70% of the US, especially since you have that 30% not in the US. Many corporations are listed in the US even if they do a lot/most/all of their business overseas. Heck, there are Chinese companies that sell nothing in the USA listed on the US stock exchanges like XPENG.
  • supermatt 1y ago
    > if it comes to pass, I at least have money? I bet 20 GBP that Brexit would happen for that reason. Ended up with around 100 GBP to drown my sorrows :(
  • ben_w 1y ago
    > Thing is, I'm not sure I will like the world where OpenAI and co. are as wildly successful as their valuation suggests either. So maybe I should invest in them, so that if it comes to pass, I at least have money? I think their current valuation isn't suggestive of a world that's going to change very much. If investors were taking seriously the idea that this could be "it" with AI enabling even full automation — not superhuman AI, not even a fast learner, just AI that can fully automate everything we've currently got and not be limited to the subset of desk jobs that LLMs can do OK — it would allow the economy to double in size in whatever wall-clock time period it takes for the AI to gather enough training data by simply observing human workers doing the things the AI has not yet learned to do. If self-driving cars are a good example in this regard, that observation time may quite large: Current AI has not yet mastered full self-driving of cars in general conditions, despite all the cameras on cars gathering data about how all the other (human-driven) cars around them behave in real conditions. To take a somewhat arbitrary cut-off points for the sake of illustration, going from the 2007 DARPA Grand Challenge to today in self-driving cars, would suggest a growth of 3.9%/year. Global GDP growth of 3.9%/year would be worth a much higher valuation than the AI companies are getting, and yet still be slow change.
• lm28469 1y ago
  > Quite hard to diversify away though because that means missing out on AI boom I find it easier to live with lower/no gains than in constant FOMO
  • IT4MD 1y ago
    I leave most of it in an Index fund. I rise and fall with everyone else. It's either that, or I try to compete with professionals, that have tools I do not have, info I do not have, algos that I do not have, and the ability to cheat the market with dark pools, which I do not have.
  • Havoc 1y ago
    Yes, though a couple 100% lucky gains sure can accelerate the journey.
• stronglikedan 1y ago
  > US economy in general is starting to make me nervous. There's a little restructuring going on, so it' bound to be a bit bumpy which would make some folks nervous, but you have nothing to fear. The end result will be a stronger economy than we've had in decades, and the entire world will be better for it.
  • AnimalMuppet 1y ago
    That seems airily optimistic. What is your factual basis for claiming this is true? What is your logic?
  • Havoc 1y ago
    I wish I had your confidence in this current plan leading to certain stronger economy
• linsomniac 1y ago
  As an alternative to diversification, I'm running fairly tight stops on my positions. If the market really shifts, or my positions shift, that'll trigger a sell, and then I reevaluate the positions and the market before buying back in.