Is This An AI Stock Market Bubble?

Cracks in the 2024 stock market bull are starting to appear.

In just five trading days in mid-July, the so-called Magnificent Seven (Nvidia, Microsoft, Alphabet, Tesla, Apple, Meta and Amazon) tumbled lower, shedding a stunning $1.128 trillion in market capitalization. That marks the biggest loss since May 2022.

Many Wall Street pros have been voicing worries about the rapid increase in stock prices this year, along with the high valuation levels and the euphoria around the artificial-intelligence technology—which many say is reminiscent of the late 1990’s dot.com boom.

Just look at the history-making run in Nvidia, a leader in artificial intelligence computing today. Nvidia’s stock price skyrocketed nearly 4,300% over five years. That has many on Wall Street remembering back to the dot.com boom, when for example Cisco ballooned about 4,500% over five years leading up to its peak in 2000.

The worry? The AI-driven 2024 stock market price surge will face the same ending as the dot.com boom in 2002: a catastrophic bust and stock market crash.

Back in the late 1990’s, the Nasdaq Composite index quadrupled in just over three years climbing at a dizzying speed amid widespread adoption of the internet and a wide-array of venture-capital fueled dot.com start-ups firms.

Yet, once the dot.com boom reached its peak in March 2002, the Nasdaq Composite index crashed nearly 80% into the October 2002 low.

The S&P 500 index fell nearly 50% in that same time period.

Looking back at that era, several internet stocks—Amazon—for example survived and thrived in the decades ahead. While other dot.com start-ups faced bankruptcy and shut down. Sifting through the artificial intelligence stocks of today, no one really knows which companies will survive and be sustained, long-term winners. But the odds suggest that many companies will simply fizzle out and not make it.

The evidence suggests this is a high-risk stock market. The price of a stock can go to zero. It’s happened before with companies that go bankrupt and close down. And it will happen again.

While no one knows for sure if this is a stock market bubble and if a crash is just around the corner, there is certainty in the safety and diversification properties of precious metals.

Gold is up over 16% since the start of 2024, making it one of the best performing asset classes in the world. Gold is one of history’s most traditional and enduring currencies. It has a 5,000-year track record as a vehicle to store, protect and grow your wealth.

There is an old saying in the stock market. Stock prices take the stairs higher but take the elevator down. Once a market crash begins, things happen fast. And it can be difficult to get your money out of a falling market.

Have you considered your asset allocation levels lately? It could be time to increase your allocation to gold. Check out your portfolio now and take action to help ensure you don’t get trapped by a falling market

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