If the AI Bubble Bursts, the S&P 500 Could Drop 20% -- These 2 ETFs Could Protect Your Money
Written by Ben Gran for The Motley Fool -> The Vanguard Total Bond Market ETF outperformed the S&P 500 index for several years after the 2008 global financial crisis. During the most recent bear market in 2022, the Vanguard International High Dividend Yield ETF outperformed the
The Vanguard Total Bond Market ETF outperformed the S&P 500 index for several years after the 2008 global financial crisis.
During the most recent bear market in 2022, the Vanguard International High Dividend Yield ETF outperformed the S&P 500.
Bonds often move in opposite directions from stocks, and a downturn in the U.S. stock market would likely be good for bond prices.
The artificial intelligence (AI) boom is top of mind for everyone who invests in stocks. Skyrocketing share prices for semiconductor stocks and other companies that are profiting from the build-out of AI data centers have become a huge part of the U.S. stock market.
But many investors are feeling doubtful and anxious along with the exuberance of this bull market. Are AI stocks too richly valued? What if corporate spending on AI capital expenditures slows? What if AI technology doesn't deliver the hoped-for gains in productivity? What if AI is a bubble that bursts?
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Bloomberg recently published research saying that if the AI bubble bursts, the S&P 500 index could drop by as much as 20%. If you feel as if your stock portfolio has gotten too tech-heavy with highly valued U.S. growth stocks , you might want to consider buying exchange-traded funds (ETFs) before the AI bubble bursts.
Let's look at two ETFs that could be good choices to diversify away from a tech-heavy portfolio.
