How can you insure yourself against the bursting of the AI bubble? There’s only one commodity you need. And I’m going to be really annoying by telling you at the end of this post what it is – and how you can get it.

So – the AI bubble (if it is one). I think it’s more accurate to say, right now, it’s just an extreme concentration of global stock markets on a single trade. And that means, if there’s trouble in AI, it quickly ripples across the globe.

We’ve had a couple of these incidents in the market recently with AI stocks falling sharply – in the US, of course, but also in markets like South Korea which are dominated by AI stocks falling 5% to 10% in a day.

These ructions have triggered quite a lot of discussion about where investors can seek shelter – if these wobbles turn out to be tremors ahead of a major earthquake. What insurance can help if the AI edifice cracks and falls?

Well, my own client portfolios hold a bit less of the US, larger companies and growth stocks; and a bit more of the rest of the world, smaller companies and value stocks – compared to the overall market – along with decent slugs of gold, Bitcoin and some hedge funds.

So there’s my answer to AI-market-doomsday prepping. But will any of that really help if markets go into meltdown – if, say, the NASDAQ or the (beloved of TikTok finfluencers) S&P500 falls 40% or 50%?

Probably not, at least in the short-term. There will be pain everywhere, just like there was in March 2020 when it became clear that COVID-19 was a pandemic. Everything sold off – gold, bonds, stocks of course. Anything liquid because investors scrambled for cash, which at the end of the day, is the only thing you can use to pay your bills. And cash isn’t much use for long, either, because of inflation.

The real answer to the question – the only real insurance – is time.

If you can see out the sell-off, whenever it occurs and for however many months or even years it lasts, then you already have the ultimate insurance in place.

Even better if you also have surplus cash to deploy into the AI companies if / when that fall has happened – because the underlying technological and societal change is real, even if exactly how the value creation is going to be shared around isn’t yet known.

You might think, that’s ridiculous. You can’t buy time. But that’s actually wrong.

This is the secret of good financial advice: the most precious value you get is, in fact, time. And if you have it, you have the ultimate safety net, no matter how the AI boom and bust plays out.

Get in touch if you want to find out how you can add time to your porfolio.