"Step one, diversify, step two, build your emergency fund, step three, sell your tech share awards"
"If you're of a certain vintage, talk of an AI stock bubble may be giving you a whiff of deja vu back to the turn of the century."
"There'll be flashbacks to the hype of the late 1990s, when unprofitable start-ups riding on the coat-tails of growing adoption of the internet and new telecom infrastructure were floated on the stock market and soaring to heady heights."
Investors should diversify holdings to reduce exposure to sector-specific bubbles. Building an emergency fund provides liquidity to withstand market downturns and avoid forced selling. Selling concentrated tech share awards can reduce risk tied to volatile valuation spikes. Current enthusiasm for AI stocks shows parallels to late-1990s internet and telecom hype. Many start-ups then were unprofitable yet experienced rapid market exuberance and soaring prices. Unprofitable startups were floated on public markets, often without sustainable business models, driving valuations detached from fundamentals. Recognizing historical patterns can guide risk management and portfolio adjustments to protect capital during potential AI-stock corrections.
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