In another thread there were some questions about how to reduce your exposure to frauds and bubbles around TESCREAL billionaires and chatbot companies in the USA. Although I cannot give specific advice, the basic approach should not take more than a few days. Here are some simple ways to avoid owning a small part of a money-losing slop peddler.
First, check what you own. Even if someone else manages your investments they should send you a monthly, quarterly, or yearly report with a list of holdings. This will often be some kind of fund which takes money and buys other assets with it.
Second, figure out what you ultimately own under all the wrappers. Most investment funds have a list of top 10 holdings and a breakdown into percentages in different types of assets eg. US stocks (equities). You can find this on their website or as a short document called fund fact sheet or similar. If the top ten holdings are full of American tech stocks, and a high percentage of assets are US equities, that is a sign that they are exposed to the chatbot bubble and might give Sam Altman and Elon Musk some of your money.
Good financial institutions will have a complete list of what that fund holds. Sometimes these will be other financial products, like a stock fund and a bond fund, and you have to recursively look up those products and see what they hold. Other times, you can see the underlying assets directly and often download them as a .csv file. Blackrock shows them under Holdings > Aggregate Underlying Holdings.
At other financial institutions you may need to phone or email to get a complete list of holdings, especially if what you own is only available to clients of your institution.
Six publicly-traded companies which seem especially entangled in the TESCREAL movement and the chatbot bubble are Alphabet (Google), Amazon, Microsoft, Nvidia, Tesla, and Palantir. Amazon, Microsoft, and Nvidia own large parts of OpenAI, Tesla is entangled with Elon Musk's other businesses, and Palantir is run by a man who issues fascist manifesti. Google has been threatening to replace search results with slop and is heavily investing in cloud infrastructure for its Gemini 'AI' (more here). If a fund invests in these big companies run by nutters, it probably invests in smaller companies from the same milieu.
Funds which track indexes of large American companies like the S&P500 and the NASDAQ-100 will also be heavily invested in companies run or funded by TESCREAL billionaires and are likely to double down on the forthcoming IPOs of companies like SpaceX and OpenAI. Sometimes large companies in one country do better than average, sometimes they do worse, and trying to guess is not a good way of making money. Some funds track the total US stock market (or other total stock markets) and this can spread your risk slightly more.
Third, if what you own is too exposed to the chatbot companies and fascist CEOs with twitter poisoning, sell some of it and buy something else. You can use the method above to judge how much something you are thinking of buying is exposed. Four strategies which you might employ are:
- underweight US stocks (eg. if you would normally have 20% of your investments in stocks from your country, 20% US stocks, and 20% in stocks from the rest of the world, you might pick 25-10-25). About 60% of global stock markets are in the USA, and 37% of that is in ten giant tech companies, so many funds invest heavily in the US by default.
- underweight US tech stocks. This can be harder but some funds focused on socially responsible investing or ESG screen out the usual suspects.
- focus on companies which pay dividends. In theory, if a company's stock is worth a total of $300m, and it pays out 1% dividends, the company is now worth $297m and the shares will drop in value, so it does not matter whether a company pays dividends or not. However, if a company can pay out dividends to its investors every year, it at least has some positive cashflow proportionate to its value on the stock market. I would be shocked if SpaceX or OpenAI offered dividends and funds which look for dividends tend to prefer well-established companies which have paid out for years or decades. Dividend funds are likely to invest in Microsoft or Apple but not Joe's Slop Shop (est. 2023, net loss last year one zillion dollars but they promise to earn it back by 2030).
- focus on companies whose stock prices have low volatility. This is a newer approach but also tends to screen out 'bubbly' and speculative companies.
None of these strategies will keep your money safe if the US stock market collapses or there is another Global Financial Crisis. When this all falls apart there will be real estate dealers who sold property, copper mines which sold copper, and HR firms which sold services and find themselves knocking on the door of bankrupt companies asking for money. Companies which built their processes around 'AI' will have to scramble to keep going. Nobody can predict all the ramifications. If you pick one of these strategies and the US stock market or the US 'tech' industry do better than average, you will have less money than you would have otherwise. However, if you put in a weekend of work you can be less exposed to chatbot companies running out of money than the average investor.
Finally, if you have not paid attention to your investments for a while, have a look at the Management Expense Ratio and any trailing fees. Many people are still paying around 2% of their investments to a financial services company every year. A mix of stocks and bonds tends to yield about 4% plus inflation over the long term, so this halves your rate of growth. Professional money-managers tell themselves that they take this money to make good decisions, but there is no evidence that they are any better at managing money than people in general, and for every manager with ten million dollars who does better than average, these is a manager with ten million dollars who does worse. It is dangerous to assume that you can pick one of the good ones. These days if you are in a developed country you can easily buy a mix of local bonds and global stocks for about 0.2% of your assets per year. Over decades, that will leave you with twice as much money as the typical investor in a high-fee fund.
Replacing high-fee funds with low-cost funds will make much more of a difference in your financial future than avoiding one stock bubble in one country. For every American billionaire in the news plotting to get 0.4% of your American stocks, there is someone in a financial services company in your country draining 2% from your friends' retirement accounts every year. You can't stop two crooks from starting a war which closes the Straits of Hormuz and cuts off 20% of the global supply of fertilizer, or your boss laying you off for a chatbot that does not work, but you can keep your cost of investing low.
Edit / added sentence to last paragraph
Edit / added a note on NASDAQ
