I'm Changing How I Manage My Money Because of AI

TL;DR

AI has created dangerous concentration in the S&P 500, forcing a portfolio shift toward global funds, small-caps, gold, and cash.

Key Points

• 1.S&P 500 concentration risk: 40% of the index sits in just 10 companies, with NVIDIA alone consuming 7–8 cents of every dollar invested, all heavily betting on AI spending.
• 2.AI bubble math: Top S&P 500 companies would need ~$2 trillion in future revenue to justify current valuations — more than NVIDIA, Microsoft, Apple, Alphabet, Amazon, and Meta earned combined in 2024.
• 3.Global diversification: Moving some money into VWRP (a 3,700+ company fund across 45+ countries, 0.19% fee) to automatically rebalance if US dominance fades, as it did for the UK after 1900 and Japan after the 1980s.
• 4.Small/mid-cap opportunity: AI models are becoming interchangeable, triggering price wars that hurt big spenders like NVIDIA and Meta, while smaller companies applying AI cheaply without massive debt stand to benefit most.
• 5.Gold allocation increase: Gold overtook US Treasuries as the top foreign reserve asset in 2025, reclassified as a Basel III Tier 1 asset, with Bank of America raising recommended reserves from 20% to 30%.
• 6.Cash reserves: Warren Buffett holds $347.7 billion in cash (Q1 2025); the creator is following suit to avoid forced selling during a crash and to buy discounted assets when markets drop.