How to Build a Portfolio If You Are Worried About An AI Bubble

October 5, 2026

AI Summary

5 min read

On this episode of The Personal Finance Podcast, host Andrew confronts a question many investors are quietly asking: what should you do with your portfolio if you're worried that AI stocks are in a bubble? He immediately warns against anyone who claims to know what will happen next—"nobody in this world has a crystal ball"—and instead offers a framework for thinking about AI exposure, concentration risk, and portfolio construction without making emotional bets.

The Two Different Fears About AI

Andrew argues that most people conflate two separate concerns. The first is an emotional reaction: you are reading too many scary headlines and your anxiety is flaring up. The second is a measurable concern: AI-related stocks have become too expensive or overly concentrated in your portfolio. These are completely different risks. "The first bet is on technology and the second bet is on the price," he says. A technology can be revolutionary and still fall 50% along the way. To illustrate, he tells the story of Amazon. In December 1999, Amazon traded at about $107 per share. Everyone who bought it was correct about everything—online shopping was the future, Jeff Bezos was a visionary, and the company would go on to dominate retail and invent cloud computing. Yet the stock fell 94%, dropping under $6 per share by late 2001. Someone who put $10,000 in at the top was left with $600, hold

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What you'll learn

1 (00:00) **Episode Intro & Context** - Andrew introduces the topic: building a portfolio while worried about an AI bubble, and warns against market prediction.
2 (04:50) **Step 1: Diagnose Your Actual Fear** - Separate emotional fear of headlines from the quantifiable fear of overpriced stocks.
3 (07:38) **The Amazon Case Study: Being Right but Getting Wrecked** - A critical story about how even a winning company can lose 94% in a bubble.
4 (13:29) **Step 2: Accept You Cannot Avoid AI** - The argument for embracing AI exposure rather than hiding from it.
5 (16:03) **Step 3: Audit Your Current AI Exposure** - A look at how much AI you already own in standard index funds.
6 (20:45) **Step 4: Dilute Concentration with Equal-Weight or Value Funds** - A tactical option to reduce reliance on the Magnificent Seven.
7 (24:45) **Step 5: Add International Exposure** - How international funds (VXUS, IXUS) can reduce US-centric AI risk.

+ Full timestamped outline available in the app

Show Notes

What if AI really is in a bubble? Should you sell your investments, avoid tech completely, or change your portfolio? The answer isn't to predict the next crash. It's to build a portfolio that can handle uncertainty while still allowing you to participate in long-term growth.

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What You'll Learn in This Episode

Why you shouldn't try to predict whether an AI bubble or market crash is coming
The difference between betting on AI technology and betting on the price of AI stocks
How much AI exposure you may already have through broad-based index funds
How index funds can help reduce concentration risk when individual companies fall
How equal-weight, value, small-cap value, and international funds can diversify your portfolio
Why adding bonds can make sense depending on your age, goals, and stage of wealth building
How rebalancing can help keep your portfolio aligned with your original investment plan
Why selling everything and waiting for a market crash can hurt long-term returns
How to create an investment plan that removes emotion from your investing decisions
How to determine your risk tolerance and build an asset allocation around it
How to organize investments across multiple retirement and brokerage accounts
What a Backdoor Roth IRA is and why it can be useful for high earners

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