“Post-bubble investor roadmap since 1929 is long bonds, and long combo of defensives and/or sectors which dramatically underperformed in the last months of the bubble,” the memo states.
Hartnett recommends relying on comparatively underperforming segments like consumer goods, mining, materials, health care and similar equities alongside bonds. According to his analysis, they’ll likely be leaders after the AI bubble, based on what’s happened in past crashes. (Famously, during some of the worst days of the 2008 stock market crash, the recession-proof Campbell Soup was the only S&P 500 stock to rise (6)).
When it’s time to pivot and diversify is a trickier question, given the overall environment of economic uncertainty.
A lot is still riding on the results of the military action in Iran, forthcoming interest rate changes, major tech IPOs and other events. It’s also worth saying that even after major shocks, historical trends show the stock market does eventually recover. Those who are able to ride out extended downturns often fare better.
As Big Short investor Michael Burry said late last year (7), “There is no way to time or predict” the end of the bubble, which could still persist for some months.
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Other harbingers of economic trouble ahead: Is this another dot-com?
Recent pundit sentiment has been unsettling for anyone heavily invested in AI equities.
Retired chief investment strategist Jim Paulsen has written numerous columns about a concerningly “extreme” bifurcation between new-era and old-era stocks, with the former “racing ahead almost in isolation.” Meanwhile, Burry, who predicted the subprime mortgage crisis in 2008, has underscored time and time again how much the present moment feels like the Y2K-era dot-com bubble.
“The market has jumped the shark … the end of this is nigh,” he wrote on his blog in May, pointing to the 784% surge in the Nasdaq 100’s top 10 over one year, which outpaced the 622% increase preceding the 1999-2000 recession.
That warning came into sharper focus on June 5, when markets reacted badly to a better-than-expected jobs report. Instead of cheering signs of economic strength, investors worried that stronger data could keep interest rates higher for longer — putting pressure on growth-focused tech stocks.
The Nasdaq Composite Index dropped 4.18% during the trading day, marking its worst performance since April 2025 when President Donald Trump unfurled his reciprocal tariffs (8).
Protect your finances now
Burry has also eagerly reminded the public how overstated tech earnings have been for years, with billions poured into infrastructure with little real return on investment, soaring valuation multiples (9) and concerningly high price-to-earnings ratios (10) that Hartnett likewise flagged in his recent message. These are all signs investors look for to indicate stocks are overvalued.
In the words of Mad Money’s Jim Cramer, the market has been “punishing anything not connected to tech or to the data center” — punished equities that may soon see a triumphant return in a new cycle.
But that doesn’t necessarily mean abandoning stocks altogether. The stock market has historically been one of the most powerful wealth-building tools available. In fact, rising equities helped create nearly two million new millionaires worldwide in 2025, according to the Capgemini World Wealth Report (11).
The key is making sure your portfolio isn’t overly dependent on a single trend — especially one as unpredictable as the AI boom.
Get advice from experts
While avoiding an overheated market is important, so is knowing where to look next. The challenge? Finding the next big winners is much harder than it sounds.
A stock that eventually becomes a multibagger often looks risky or uncertain in its early days. Retail investors may not have the time, resources, or expertise to dig through earnings reports, industry trends and market data to separate promising companies from overhyped ones.
That’s where expert research platforms like Moby come in.
Moby’s team of former hedge fund analysts and experts spend hundreds of hours each week sifting through financial news and data to provide you with breaking stock recommendations.
The platform’s success speaks for itself. The platform’s stock picks have outperformed the S&P 500 index by about 11.9% over the past four years.
And if you sign up for Moby Premium you get one free top-stock.
Even better, Moby offers a 30-day money-back guarantee so you can see if the service is right for you.
Stick to index funds
Even with the right research, finding the next breakout stock is never guaranteed. Searching for the next Amazon, Nvidia or Apple may sound exciting — but it can also be a difficult game to win. High-growth stocks also carry higher risk, as even companies with strong potential can struggle for years before delivering a meaningful return.
For investors who want market exposure without constantly searching for the next winner, index funds can offer a more reliable path.
Even legendary investors like Warren Buffett advocate for this approach.
“The trick is not to pick the right company, the trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low cost way,” Buffett said in an interview with CNBC (12).
The best part about this approach? You don’t need to invest a lump sum in order to invest in an S&P 500 index fund.
Apps like Acorns allow users to invest spare change from everyday purchases automatically in a diversified portfolio of ETFs, helping them steadily build wealth without having to think about every market move.
All you have to do is link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a smart investment portfolio managed by experts at leading investment firms like Vanguard and BlackRock.
With Acorns, you can invest in an index ETF with as little as $5 — and, if you sign up today and set up a recurring investment, Acorns will add a $20 bonus to help you begin your investment journey.
Hedge with alternative assets
Even a well-diversified stock portfolio can face pressure when the broader market struggles.
Between inflation concerns, geopolitical uncertainty and questions around stretched valuations, the stock market still remains highly volatile.
That’s why hedging your portfolio with defensive assets that have a low correlation to the stock market can be beneficial.
Gold, for example, has long been viewed as a safe-haven asset because it doesn’t always move in the same direction as equities. When investors become worried about inflation or economic instability, gold often becomes more attractive as a store of value.
A shining safe haven
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
This way, you can hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold.
If you opt for Priority Gold’s platinum package, you can get free account setup and insured shipping and storage for up to five years. Plus, you can also rollover your existing IRA or 401(k) into a precious metals IRA with Priority Gold — tax and penalty free.
And when you make a qualifying purchase with Priority Gold, you can receive up to $10,000 in precious metals for free. Just keep in mind that gold is often best used as one part of a well-diversified portfolio.
Add real estate to the mix
Another way investors can protect themselves from an overheated stock market is by adding real estate to the mix.
Unlike many AI-driven stocks, which rely heavily on future growth expectations, real estate is tied to something more tangible — land, buildings and rental demand.
That can make property a useful hedge if parts of the stock market experience a correction. Even if AI stocks crash, real estate investments may continue generating income through rent and benefit from long-term demand. And as prices rise, rents often rise as well, helping property owners maintain purchasing power over time.
The good news is that gaining exposure to real estate no longer necessarily requires buying an entire property outright or taking on the responsibilities of being a landlord yourself.
Mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.
Founded by former Goldman Sachs real estate investors, their team handpicks the top 1% of single-family rental homes nationwide for you. Simply put, you can invest in institutional quality offerings for a fraction of the usual cost.
Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10% to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.
You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.
— With files from Becky Robertson
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Reuters (1), (5); Bloomberg (2); Bank of America (3); CNBC (4); The Denver Post (6); Business Insider (7); CNN (8); Morgan Stanley (9); Investopedia (10); CNBC (11), (12)
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