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Apollo Global Management CEO Marc Rowan warned that Wall Street may be underestimating the risk of a major “out of the box” economic shock, suggesting a 30% to 35% probability of a significant disruption despite current market highs (1).
“Everything we see in front of us is actually quite strong,” Rowan said. But there is “a much greater chance, in our opinion, of out-of-sideline results.”
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Speaking after Apollo surpassed $1 trillion in assets, Rowan pointed to a combination of inflationary policies, like geopolitical instability and AI-driven labor market shifts.
In response, the firm is positioning defensively by upgrading credit quality and building cash reserves, while Rowan further cautioned against aggressive practices and “contagion” risks within the insurance industry.
A contagion risk refers to the cumulative effect of shocks and financial crises from one country, market, or institution to the next (2). They spread, like an illness, due to growing interconnectivity between financial systems.
The end result, according to Rowan? Direct intervention from a doctor, which in this case would be regulators and banks.
Preparing for the worst
Apollo isn’t some niche hedge fund making speculative bets on the sidelines of the economy — it oversees roughly $1 trillion in assets and sits at the epicenter of interconnectivity between private credit, insurance and retirement investing (3).
Rowan said Apollo is already positioning more defensively. The firm has upgraded the credit quality of its fixed-income portfolio, reduced exposure to riskier sectors like software and built up roughly $40 billion in cash inside its insurance operations.
“It means we’re investing with an eye toward protecting our capital and making sure that we are here to ride through cycles if there are corrections, which we quite frankly expect,” Rowan said.
Rowan suggested many current economic policies could keep price pressures elevated even if inflation data appears relatively stable today.
“Almost everything we’re doing, whether intentional or not, has the potential to be inflationary,” Rowan said, referring to policies including tariffs and immigration restrictions.
“Restricting the supply of goods, restricting the supply of labor and the free movement of goods and labor — maybe for good and valid reasons that need to be done — are all inflationary in the short term, even if we are not seeing signs of it,” he added.
Read More: Robert Kiyosaki warned of a ‘Greater Depression’ — with millions of Americans going poor. Was he right?
Another devil to beguile us
At the same time, Rowan believes artificial intelligence could dramatically reshape the labor market in ways many investors still are not fully accounting for.
“Almost every job will be enhanced or replaced,” Rowan said. “We’re going to see a complete flip — blue-collar ascendancy and white-collar stress.”
The rise of blue-collar jobs and the fall of white-collar jobs due to AI has been hotly discussed in the media. Even learning institutions like Pearson have weighed in on the subject, going as far as to say that anywhere between 30% to 46% of hours spent on white-collar work could be done by generative AI (4).
For ordinary investors, the broader takeaway may not be to abandon markets altogether, but rather to think more carefully about diversification and downside protection amid elevated uncertainty.
Positioning during an ‘out of the box’ shock
HSBC Private Bank and Premier Wealth experts surveyed 10,000 “affluent individuals” across a dozen markets and found that the most successful investors prioritized security by building more diversified portfolios (5).
“Build shock absorbers, not sandbags,” Willem Sels, the Global Chief Investment Officer of HSBC, wrote in the survey report. “Combine bonds, gold, infrastructure, real estate and hedge strategies so at least one protector is working in every market scenario.”
That way, when there’s volatility somewhere in the market, you might not feel the contagions quite as badly in your portfolio.
A time-tested asset
Gold serves as a critical hedge against uncertainty by providing a shield against currency devaluation, inflation and other systemic financial risks. Unlike fiat currency, gold can’t be printed at will and tends to preserve its value in a market downturn. In other words, it’s a way to manage market risks (6).
One powerful strategy offering significant tax advantages is opening a gold IRA with the assistance of Priority Gold.
Gold IRAs are uniquely designed to safeguard your retirement: they let you hold physical gold or gold-related assets within a retirement account, blending the protective power of investing in gold with crucial tax benefits, a must-have for hedging against today’s economic uncertainty.
Ready to fortify your retirement savings? Claim your free information guide today, which also includes details on how to get up to $10,000 in free silver on qualifying purchases. Just keep in mind that, often, gold is best deployed as one part of a well-diversified portfolio. That way, if the market dips, more of your wealth could be preserved.
Real estate
Another hedge against market volatility is real estate. Apollo itself invests heavily in real estate, with just under $48 billion in AUM dedicated to its real estate strategy in 2025 (7).
Real estate is interesting because while it doesn’t offer stability in the market per se, it’s an income-generating asset that could potentially offset the pressure of shocks.
You can tap into this market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match. To get started, simply browse their selection of vetted properties, each chosen for its potential to appreciate and generate income.
While Arrived offers an easy way to get started with rental property investment, not all real estate opportunities are structured the same. For investors ready to take a bigger swing into institutional-quality multifamily and industrial deals, a different approach is available.
Big opportunities for big portfolios
Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.
Lightstone DIRECT’s direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.
With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.
The shift toward institutional-quality real estate is part of a broader trend in which assets once reserved for the ultra-wealthy are becoming more accessible to individual investors.
This democratization applies not only to real estate but also to other previously gatekept tangible assets.
Something is missing from traditional portfolios
In a period of heightened market volatility, data suggests stocks and bonds alone may be less reliable for consistent long-term growth. As alternative investments become more accessible and attractive, more investors are seeking smarter ways to diversify.
Now, Masterworks is offering a single investment that combines blue-chip art with other scarce assets, such as gold and bitcoin, that have historically moved independently of equities and of one another.
The result is a more balanced, all-weather approach to alternative investing. In fact, this model would have outperformed the S&P 500 by 3.1x from 2017 to 2025.*
By leveraging access to museum-quality artwork alongside other uncorrelated assets, the strategy aims to enhance diversification while still pursuing meaningful appreciation.
Discover how diversifying with this strategy can strengthen your portfolio for the years ahead.
*Investing involves risk. Past performance is not indicative of future returns. The 3.1x figure reflects a model backtest, not actual fund performance.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
CNBC (1); Number Analytics (2); HedgeCo (3); Pearson (4); HSBC (5); The Assay (6); U.S. Securities and Exchange Commission (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
