1Sem.·

Edit due to the AI "sell-off" 🦅

Edit: I don't think AI is over. But after such a long run of success in the AI sector , the market has now undergone a significant correction. A pullback of 10 to 20% is really just a blip in the portfolio for most of us long-time shareholders… but it’s not exactly nothing either.

Why all this, anyway?

There are concerns, based on the results of the midterms, there are fears that stricter AI regulations . On top of that, many investors—perhaps including you—are simply taking profits and reallocating their portfolios right now.

Whether you choose to do that yourself is , of course, based on their own investment case.

I think the midterms were the trigger, but not the actual cause. However, this shows quite clearly just how shaky the whole thing has become by now... in my opinion.

Things are just getting more turbulent up there. The Expectations are enormous. On top of that, there are other questions, such as whether there’s even enough electricity capacity will be available at all and whether the tech companies will be able to promises and forecasts in the long term.

I’m invested in tech myself, and the sector now accounts for a quite a large portion of my portfolio . I love tech… aka $MSFT (+0,54 %) and $META (+2,47 %) maybe even Accenture $ACN (+0,69 %) —though Accenture’s stock has fallen precisely because of fears that AI could replace a large part of its business.

I’m not going to sell anyway. Especially not companies that are among the top 10 in the indices.

Still, I’m becoming a bit more thoughtful as the weeks go by. I’ve noticed that some defensive stocks during pullbacks
in the AI sector hold up significantly better. This is especially evident to those of you who have such companies in your portfolios.

Above all, “defensive” always sounds so boring. Yet, in addition to the classic defensive stocks, there are also many strong companies among us with strong business models, such as:

McDonald’s $MCD (-0,32 %)
Coca-Cola $KO (+2,01 %)
JPMorgan $JPM (+0,8 %)
Walmart $WMT (+1,97 %)
Mastercard $MA (+1,47 %)
TK Maxx $TJX (-1,22 %)
Allianz $ALV (+1,17 %)
Berkshire Hathaway $BRK.B (+0,77 %)
Siemens $SIE (-0,5 %)
(Fun fact: You can see Siemens everywhere in rail facilities, not just on the trains themselves.)
And and and... the list goes on

Everyone just has their own favorite companies in this world.

I got sidetracked… 😅

What I really wanted to ask is:

How do you assess the current situation in the AI market? 📉📈

I’m an investor just like you, and I just want to know how others are thinking and reacting… if you’re reacting at all…

Peace ✌🏽

Poor Dad

@PoorDad

1Sem.·

AI was a nice demonstration, but what now?

I don't think it's over either… but let's be honest: The euphoria is the only thing keeping this whole thing alive right now. ☯️

We were told something new , we celebrated it, we raised it up to the heavens and thought things would just keep getting better from here on out.

You always think that, with every sector cycle... 📈📉

And yes, things will go up again, but money can’t be pumped into one thing . So diversify a little, get a little bit of everything—to the newbies out there, or those who haven’t learned anything new yet. Unless you’re so sure that the music will keep playing.

We also have to keep in mind:

We, as private investors, are the catalysts for those who, as first were there. We are always last on the scene when the party is about to end.

A good example:

@Tenbagger-Capital … he’s just only now preparing with his portfolio 2036 . When the euphoria sets in later.

At least, that’s how I understood it.

If this future comes to pass, then that’s how it will play out.

Or, quite simply and more to the point:

The big players are always there first; it trickles down from the top 💩

Why do you think people say: “When the taxi driver starts talking about stocks, sell.” 🚕

By now, even the delivery drivers are talking about it (nothing against delivery drivers—I just couldn’t think of anything else).

My strategy is pretty boring and definitely not a solution: 🧯

GICS Ex-Tech with a pinch of Tech. It’s working out pretty well for me. And, of course, countercyclical… you can see what hype can do.

It’s just my opinion (which isn’t very meaningful), and I’d love to hear what you think. Is this the bubble bursting?

Image generated with AI

31 Commentaires

Donkey Diktator@DonkeyInvestor

1Sem.

We're just getting started. Now is the time when non-tech companies need to—and hopefully will—leverage the productivity benefits of AI.

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Poor Dad@PoorDad

1Sem.

@DonkeyInvestor Don't you think that's exactly where regulations might come into play? Why do you think that's a good thing—or maybe not?

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Donkey Diktator@DonkeyInvestor

1Sem.

@PoorDad Of course there will be regulations. It’s just like the regulations surrounding Bitcoin. Regulations mostly protect us. A few are nonsense. Some have more, others less. But regulations have always existed, and the economy has always grown. I have no idea why regulations should put a stop to that.

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Poor Dad@PoorDad

1Sem.

@DonkeyInvestor No, the plug will never be pulled, but maybe such a high valuation isn’t necessary for tech stocks to keep going as they have been. Until reality finally hits even the last optimists… I read yesterday about electricity capacity: as AI expands, energy demand is rising disproportionately… It’s like if the auto industry decided tomorrow to produce 30,000,000 additional cars, even though there are no buyers for them because there’s no gasoline available.

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Donkey Diktator@DonkeyInvestor

1Sem.

@PoorDad Of course, a high rating isn’t “necessary.” But it’s there nonetheless. Energy demand is rising => greater need to produce more energy. More renewable energy, more research, better efficiency. Who knows—maybe AI will also enable us to make a breakthrough in nuclear fusion?

No one needs 30,000,000 additional cars. Cars are generally limited to one per person. AI scales. AI can do work on its own in the background. There’s no reason not to use different AIs for different purposes...

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Poor Dad@PoorDad

1Sem.

@DonkeyInvestor But that’s the thing—how are we supposed to scale up with AI when that also requires more capacity and money… Here’s another example: it’s like a garden bed that gets flooded because the bed is too small…
Who’s going to finance the mountain of debt if there are no limits? All these innovations require immense investments, even though the profits aren’t there yet… that’s exactly why people are talking about the AI bubble… everyone talks about “a one-time investment, and then the profits will roll in”… it’s all just a “maybe” scenario…

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Donkey Diktator@DonkeyInvestor

1Sem.

@PoorDad Oh, okay, I think I get your point now. What good does it do us if we can use AI to produce 30,000,000 more cars if there aren't any buyers for them? Right?

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Poor Dad@PoorDad

1Sem.

@DonkeyInvestor No, there's no gas… 😞

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Donkey Diktator@DonkeyInvestor

1Sem.

@PoorDad Everyone drives electric cars these days. I've already explained to you where the extra electricity comes from 😁

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Poor Dad@PoorDad

1Sem.

@DonkeyInvestor So that’s the next topic… Seriously, why don’t we just forget about AI and buy a wind turbine company? 🌬️ Just for fun

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Donkey Diktator@DonkeyInvestor

1Sem.

@PoorDad Productivity doesn’t necessarily mean producing more. When it comes to cars, AI could help make them more energy-efficient. The software could be improved—for example, with better driver-assistance systems. In some cases, the cost of producing components might go down, which would lower the purchase price or allow for more comfort at the same price.

There are countless ways AI can boost productivity without necessarily having to produce “more.”

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Voir toutes les 3 autres réponses

Basti92@BavarianLion

1Sem.

I’m definitely going to hold onto the big players! In my portfolio, for example, Amazon, Alphabet, and Microsoft! I definitely see a bright future for these companies, especially when it comes to AI! As a small “bet,” I only have Iren anyway—that’s an all-or-nothing play for me (but it’s only 0.8% of my portfolio)!

All in all, I’m still very bullish on AI, and a sell-off like yesterday’s can just happen!

Of course, the hyperscalers’ investments are massive and people are getting nervous, but that’s exactly my point: wait until the profits come in—then that will show up in the stock prices too!

Just my opinion 🙂

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Poor Dad@PoorDad

1Sem.

@BavarianLion The big players are the clients, so I'm staying in on this one. These massive investments might be one-time events, but they may even have to be even larger in the future. We'll see soon enough.

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🏊🏻‍♂️ • 🚴• 🏃‍♂️ Endurance Life@MozartsGeist

1Sem.

Great series of posts from you—it was fun to read. The last few days really did call for a portfolio analysis. Investment portfolios were put to the test one after another. The turbulence in the tech sector has shown what an often-touted “concentration” actually feels like. For me, the maximum drawdown yesterday was just under 4%, after which the recovery in that same sector didn’t take long to materialize today. Surprisingly, though, there was a pullback today among my mostly solid positions. Exciting and captivating at the same time… we know that we know nothing! ☺️

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Poor Dad@PoorDad

1Sem.

@MozartsGeist Definitely exciting... I have to say, yeah, we don't know anything, but then intuition is the next best tool... My gut feeling actually tells me that in the short term, things will get very volatile and uncomfortable—but not in the other sector! 🤣 It's like a Spidey Sense🕸️ that I have...😁✌🏽

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Ichbinak63@Ichbinak63

1Sem.

@MozartsGeist Just as Douglas Adams says: 42—the answer to everything.

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🏊🏻‍♂️ • 🚴• 🏃‍♂️ Endurance Life@MozartsGeist

1Sem.

@Ichbinak63 It's always these nerds!
In a marathon, you never know how it's going to turn out beforehand 😉

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Tobi60@Tobi60

1Sem.

If we didn't check our portfolio 20 times a day, I don't think we would have even noticed this "crash" yesterday.

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Poor Dad@PoorDad

1Sem.

@Tobi60 Yeah… if it weren't for those Finfluencers who post their portfolios in their Stories every day. That's quite a fuss… 😂

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Voir une réponse de plus

jkb92@jkb92

1Sem.

Well, I'm expecting a backlash, at least for now. After a VIX spike like the one we saw yesterday, the (temporary) bottom isn't far off.

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Poor Dad@PoorDad

1Sem.

@jkb92 Yeah, but the VIX doesn't predict the future... but yeah, I think that was just a demonstration of how reckless things can get if something serious were to actually happen.

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Smudo@Smudeo

1Sem.

Didn't you have " $PAYX " too?

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Poor Dad@PoorDad

1Sem.

@Smudeo I still have it

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NichtRelevant@NichtRelevant

I don’t think AI is dead when it comes to the stock market—the topic is simply too important for that, and AI is already transforming many work and production processes. This trend will continue and will be irreversible. The question is simply how much of AI’s potential is already factored into the stock prices of the relevant companies, and whether, in the end, all companies will survive the race for dominance in the industry.

As an older person, I still remember the hype surrounding telecommunications companies. Back then, huge sums were spent on mobile spectrum because people believed that was the only way to compete with the industry giants. It later turned out that they had completely gambled away their money and had to write off large sums. With AI companies and their investments in computing infrastructure, it could turn out the same way at some point—but of course, no one knows for sure.

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1Sem.

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Poor Dad@PoorDad

1Sem.

@Creutzfeldt_Jakob Do you switch market phases often, or was that a one-time move?

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1Sem.

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Poor Dad@PoorDad

1Sem.

@Creutzfeldt_Jakob You've found your center, Jakob. Today's investors worry too much about what's going on outside—political events and the like. If you tune that out, you'll see that you don't really have to pay that much attention to it.

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