Betting the AI Trade Cracks
Matthew@mjsilverman19
+4.7%
since Sep 30
The idea
I believe the AI trade cracks within a year, spending collapse and souring sentiment feeding each other, so this basket owns the aftermath on both sides. The core holds companies priced as if AI wrecks them (agencies, staffing, IT services, creative software, education) that should re-rate once the fear fades, surrounded by cheap value stocks catching rotation, gold and defensive dividend payers for the messy part of the fall. Cash sits larger than usual, kept ready to buy more once the initial crack drags everything down.
What it owns
- Companies currently priced as if AI makes them obsolete stand to re-rate sharply if that fear proves overdone and the boom cracks. · Adobe Inc.It trades as if AI tools render creative software obsolete, but re-rates when that threat deflates and the company's entrenched position becomes clear again., Accenture plcIt trades as if AI automation eliminates consulting demand, but benefits when companies stop betting on software and still need professional help cleaning up the wreckage., EPAM SystemsIt was priced for irrelevance on the belief AI replaces code-writing, but re-rates sharply if the boom breaks and demand for human software builders returns., Upwork Inc.It is priced as if freelance work disappears into chatbots, but re-rates when AI disappointment brings demand back for real people doing real work., Omnicom GroupIt trades as if AI makes agencies obsolete, but benefits when public skepticism of AI makes human-made creative work valuable again., Robert Half Inc.It fell on fears AI shrinks hiring permanently, but recovers when companies stop betting on software and demand for actual staffing returns., ManpowerGroupIt is one of the most punished staffing firms, priced for disaster, and offers the biggest re-rating potential if it merely survives the AI boom's deflation., Genpact LimitedIt trades as if AI makes outsourcing obsolete, but re-rates sharply on mere survival once clients realize they still need human-run processes despite the hype., Pearson plcIt is priced as if chatbots replace education, but hedges that risk through recent acquisitions of AI-native tools while the replace-education narrative fades.40%
- Cheap, cash-rich businesses offer natural homes for capital rotating away from expensive AI-linked stocks once sentiment shifts. · Berkshire HathawayIt is cheap, cash-rich, and positioned to absorb capital rotating from expensive megacaps while its balance sheet lets it buy distressed assets if the crack deepens., Invesco S&P 500 Equal Weight ETFIt tracks an equal-weight index that outperforms when AI megacaps stop leading the market and the average stock holds up better than the giants., JPMorgan ChaseIt offers a profitable, blue-chip landing spot for capital leaving expensive tech, with a balance sheet strong enough to weather the initial turmoil., Exxon MobilIt generates cash today at cheap multiples, offering a natural home for capital rotating away from businesses priced for AI-driven growth., CVS HealthIt is already cheap and unfavored, so it carries little AI premium to lose and serves as a rotation landing spot for value-seeking capital.24%
- Gold and gold miners tend to rise when confidence in market narratives breaks, providing protection if the AI boom unwinds sharply. · SPDR Gold SharesIt serves as the classic refuge when bubbles pop and market confidence breaks, protecting a portfolio built for a crack in the AI boom., VanEck Gold Miners ETFIt amplifies gold's gains during crises, moving harder than the metal itself when confidence breaks and money flees risk.12%
- Steady dividend payers from essential businesses provide ballast while sentiment deteriorates and the market absorbs the initial impact. · Coca-Cola CompanyIt pays a steady dividend from a business people use regardless of economic conditions, providing income stability while sentiment deteriorates., Johnson & JohnsonIt provides defensive income from healthcare demand that ignores AI sentiment swings, offering ballast through periods of broad market stress., Verizon CommunicationsIt pays a high dividend from essential phone bills regardless of economic conditions, providing income cushion while the crack plays out.12%
- Cash12%