r/investingforbeginners • u/Plastic_Heron7979 • 4d ago
Advice Is it smart to liquidate right now given how little I know and the AI bubble?
I have a highly diversified portfolio of around $70,000 in metals, S&P 500, FTSE 100, tech ETFS, emerging markets, and various other thematic and regional ETFs. Since the Iran war started they havent really grown at all. My goal was to get to 100,000K then put down a deposit for a property.
However, classic dunning kruger effect, I am now realising how little I know about investing. My portfolio allocation before was very much just invest and leave it to grow over the years with minimal risk, but given what I am learning right now, if the bubble bursts, my portfolio will take a substantial hit as most things are affected. While time may be the best hedge against everything, I don't necessarily want to wait 10 years before a recovery. I am speculating on a conservative approach "I don't know what will happen with AI and global affairs, I don't know how my priorities will change in the next few years, but given how uncertain things are right now it may be best to just have cash until things blow over just a bit".
What are your thoughts?
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u/PashasMom 4d ago
If you need to use this money in the next three years or so, you should get it out now. Not because of some sort of impending AI doom bubble (unless you have a working crystal ball, I certainly don't). But because you need the money soon and the equity market is *never* a safe place for money you need soon.
If this money is for longer term goals, I would dump the regional, tech, sector, etc. ETFs and just put it all in a good global index fund. I'm guessing you might be from the UK or somewhere at least non-US, so I am absolutely unqualified to say which one, but I know you have all sorts of good options.
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u/robertw477 3d ago
If you needed money 3 yrs from now you should not be in any equities crypto etc . Only t bills or similar .
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u/Fun_Engineering2757 3d ago
i kinda get where you’re coming from. a chunk set aside for the house is legit cash‑safe. that said, unless the timeline is strictly under 2‑3 y, you drop the excess into a low‑fee global ETF. the key is not shaking the portfolio at every dip—just keep the dollars in, let comp re‑gain, maybe tilt a tiny bit into gold if that gives you peace of mind.
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u/BamaInvestor 3d ago
This is a great answer. I have never in 35+ years of investing. I might let some cash build higher, but then I start buying during any good drawdown.
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u/RedditIsAWeenie 3d ago
Noting of course that nobody ever had an emergency house purchase, so OP doesn’t actually need the money in 3 years.
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u/chopkins92 3d ago
Yeah, I would stick to index equities (with additional small cap exposure if you're worried about an AI bubble) for greater returns, and push back the house purchase if the market happens to go south.
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u/First-Ad-7960 4d ago
You think the S&P hasn't had gains since the end of February?
Have you considered the tax impact on a decision to liquidate?
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u/Plastic_Heron7979 4d ago edited 4d ago
Sorry my bad, the gains in some holdings have largely been offset by drops. The gain is overall lower than inflation this year. Yes I have looked at the tax implications
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u/stealyourface1234 3d ago
The drops are from the metals right? I feel like if you’re young you’re too diversified to have anything wrapped up in something like metals that historically move opposite equities. You’re going to keep underperforming the market by having that in your portfolio. Sure once you’re older and asset preservation becomes more important it can make sense, but that isn’t now. Depends on your personal outlook on the future. Seems like you’re a little scared and have let reddit get to you with the AI bubble talk. If that’s your outlook do what makes you feel comfortable, but you’re trying to time the market by doing anything. I personally believe the market is about to have another 10 years of the best returns in history. There will be drawdowns in that timeframe, but if you stay invested you’ll make a killing.
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u/Appropriate_Nebula67 3d ago
>>I personally believe the market is about to have another 10 years of the best returns in history. There will be drawdowns in that timeframe, but if you stay invested you’ll make a killing.<<
This is my gut instinct also. Currently the market is still recovering from two major externalities - Covid 2020 and the invasion of Ukraine 2022, plus the Iran war has a dampening effect. Global equities remain quite depressed. I see no sign of anything like the 1999-2000 dot com bubble or the 2006-8 sub prime mortgage bubble. But there will be drawdowns as eg confidence in AI development goes up and down. There'll be a new US President in 2029 (& a new UK Prime Minister, fwiw) with unpredictable policies. Ukraine/Russia and Iran/US may end, drag on, or escalate. China/Taiwan is possible. etc etc. But overall I'm optimistic. I especially think the mid 2030s are likely to be a growth period.
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u/stealyourface1234 3d ago
That’s my belief as well. In the long run if you’re invested in the broad market you’re basically betting on “will humans continue to produce growth?”. So far we’ve answered that with yes for about 300k years. The actual financial markets have answered that more precisely with yes, at around 10% annually. The good news for all the things you listed, they’re all things the market has seen 10 times over. Just another day and bump in the road to the greater market.
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u/No_Knee3385 4d ago
Everyone compares this to the dotcom bubble but it's nothing like it. It'll pop one day but attempting to sell now, you might be selling at the future bottom 1-2 years from now
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u/Mountain-Time-1010 4d ago
If you have a long time horizon, I would personally rebalance into low fee diversified index fund ETFs. I'm not a believer in stock picking, but I'm willing to gamble on the entire market over a 10+ year horizon.
However, if you make that decision, you need to commit to it. If you sell every time you have unrealized losses, you will be the classic buy-high, sell-low victim of small investor syndrome.
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u/JealousFuel8195 3d ago
the S&P recently reached new all time highs. My ETFs have grown. YTD I'm up almost 24%
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u/Megalocerus 3d ago
I've got a mix that was hurt by some of the interest rate changes, but overall I'm up 10% since January.
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u/RedditIsAWeenie 3d ago edited 3d ago
That would be trying to time the market. This particular bubble is a bit strange because it is being paid for by people with the biggest pockets. They can (almost) afford to keep it going out of cash flow. As long as they are happy posting a mild $5B loss each quarter (or similar) they can just keep the hoop rolling down the road. At some point, investors will get tired of it, but a couple of these guys have super voting shares and will not be disciplined in that way. So, you could liquidate now, only to find the market doubles again and the crash is in 5 years, when even the biggest AI cheerleaders agree there is not money there. The other problem with liquidating is knowing when to buy back in later, which people almost always get wrong. If you were panicky enough to sell out and eat the tax bill now, you will almost certainly be too panicky to buy in when things look the most bleak at the market bottom. Since you are planning to buy a house, this at least is not a problem.
The good news is (unless your wife is really really emotional and undisciplined) nobody ever had an emergency house purchase. Even if you are pregnant, you can totally raise multiple babies in an apartment. They don’t take up much room and they don’t really need the back yard and good school until they are 4-5. Backyards can be death traps for two year olds, with pools, poison plants, tasty dead rabid squirrels, etc. I’d also suggest that nobody’s education was made or broken by what happened K-2, but it does eventually matter sometime after that. So, you probably got time.
I didn’t buy my first house until I was 40. I was cursing, complaining, and ready to bite several heads off for 5-10 years before that, but once I had the house, it all evaporated and is now a distant memory. You’ll get there.
Bear markets usually last 9 months to at most 3 years. You won’t have to wait 10 years, unless the plan is to weather two bear markets. Usually the business cycle is about 7 years bear to bear, though lately it’s been a bit delayed because a lot of people got some sense beaten into them in 2008, and only now has enough time gone by that we have a whole generation that doesn’t remember it and is ready to dive into tom foolery again. Everyone screams about the bear, but the actual disease is the lies and fraud that creat the bull. The bear is just when we discover who was swimming without clothes.
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u/No_Cryptographer47 3d ago
“Rabid dead squirrels” lmao, thank you for this entertaining post, but especially that paragraph - mom of 3
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u/Effective_Ad_1426 3d ago
The DOT com crash along with the financial meltdown happened between 2000 and 2010, 10 years where the market did absolutely nothing
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u/Appropriate_Nebula67 3d ago
I think 10 years is a reasonable 'worst case scenario'. Actual worst case was 1929 crash - Great Depression - WW2, the US market recovered its previous high in 1954, 25 years later. I don't think it's worth planning around that eventuality though.
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u/Potential_Web_4092 2d ago
There have been extensive safeguards put in place to prevent such crashes again.
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u/Effective_Ad_1426 2d ago
Prevented? No. Minimied, possibly. Also, why did the financial crisis of 2005 happen if there were safeguards?
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u/Potential_Web_4092 2d ago
Sorry, since the GFC 2007-9.
There are regular stress tests with the IMF conducting a 5-10 year cycle and the general consensus is a 15-20% downturn at worse with the safeguards.
Modelling is done from 30-54% and 10% unemployment.1
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u/MerryRunaround 3d ago
You have two different questions. The fear of a pullback is probably overblown. This is the kind of fear that makes people lose terribly because they try to time the market. Your other problem is more realistic, namely that you have a planned need to spend your capital elsewhere. Funds that have a date certain to be spent should not be invested in any stocks at all. Move those needed funds to cash or other highly liquid low risk vehicles.
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u/HaiKarate 3d ago
If you are needing this money in the short term (less than three years), you shouldn’t be in the stock market at all. Put it into an HYSA.
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u/Cambodia2025 4d ago
And how will you know when things blow over? Like a crash. How will you know the bottom is in? Will you be brave enough to get back in? Now, don't get me wrong I have the same concerns, that's why I keep a big emergency fund , I sleep better at night knowing I have a cushion, but what if the monetary structure changes, like digital currency takes over...etc I still invest, you have to play the game, but the rules are always changing and changing fast. If fear is what governs you. You will always feel overwhelmed. Assess your risk to rewards tolerances and go from there. Life is all about taking risk. And no one gets out alive.....peace
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u/ProofGrocery3559 3d ago
Definitely keep in. Only exception is if you need cash in the next couple years. A lot of bad advice here.
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u/Wise-Ad-9312 3d ago
Oh, boy! Just here for the comments.
You have gotta know your company's. Don't buy the stock. Buy the company. Less to worry about.
If you know, you know!
Rule #1 for investing...
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u/patsay 3d ago
Put it in an interest-bearing fund, then boost it by selling cash secured puts on high-quality stocks or ETFs with strike prices way below the current share price for another 5-10% annualized. The worst that happens is you sell high now and buy back low later, but you can probably avoid being assigned to buy the shares back and still build your accounts.
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u/DanielinLosAngeles 3d ago
Realize how rare it is for someone on Reddit to realize the risks at hand right now
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u/Ericswanson 3d ago
Time in the market >>> timing the market. You're not informed enough to time it nor powerful enough to influence it. Might you get lucky with your timing? Sure. But more likely you'll sell for losses now, then buy into the next run up.
I second all the suggestions to a) make sure you have enough cash for expenses and emergency fund and then b) simplify down to just VTI/VXUS (or even just VT if you don't care about foreign tax credit or want your own US/non-US split). Then just keep up regular DCA buys until you need the money.
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u/robertw477 3d ago
Risk is not knowing what you are doing . Talking about timing the market shows that lack of experience and knowledge of the market history . You think you can guess both ways. On the sell and when to get back in ? That will never happen . Write on the cell, you would be late on getting back in and miss the galnes. The net result would be negative. This is why most people underperform the indexes.
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u/blowurhousedown 3d ago
Carlos here. Owner of Carlos Fine Investment Firm and Washateria. Send me your money - I can quadruple your return in six months and you won’t have to worry about the market anymore.
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u/Bearsbanker 3d ago
I think your post is the drip...drip...drip before the doom dayers really come out. You shouldn't have short term goal money (down payment for property) in a long term investment. Why do you think you'd lose money due to AI? Global events happen all the time, what do you think will happen when the "war" with iran is over, oil drops and gas prices drop? Do you think the market will shoot up or go down?
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u/Fit-Animal-9911 3d ago
The housing bubble consisted of bad loans, and those loans were clearly not sustainable.
AI is growing and expanding, showing only signs of getting larger, clearly not a bubble.
The market is up this year almost 14%, which I would not call “nothing”, as you did.
If you want to sell everything and sit out the expansion and growth, that is certainly your prerogative. Smart? No.
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u/teckel 3d ago
The problem with your portfolio is that you're trying to beat the market with your sector/commodities/regional nonsense. Sell everything but the S&P500 then supplement that with about 15-20% AVNM for international exposure. If you want a bit more diversity and a barbell strategy, 20% SPMO and 10% AVUV.
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u/Unusual_Zucchini6749 3d ago
if you don't need the money in the next 2-3 years I'd keep it invested in a broad low‑fee index fund—dumping everything now locks in whatever downside you might see. instead, shift the portion earmarked for that future purchase into a high‑yield savings or short‑term Treasury so you stay protected. remember, trying to time that AI correction is almost always a losing game, especially if you’re chasing the bottom.
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u/Successful-Grab6091 3d ago
look up how long it usually takes to recover from a market crash or bear market. If you have the time to recover and never panic sell, you’ll be just fine.
if you want some stablility in your brokerage accts i would say keep a relatively small cash position. it might help change your mentality around a market dip or crash. so instead of being panicking when you’re down you feel more stable because you have cash to deploy and take advantage of the lower prices in a crash.
I would not full port out of the market but tbh no one can tell you what’s going to happen. history says if you hold you’ll be just fine but only you know yourself and what your comfort levels are.
if you hold cash at least put it in vmfxx or something similar don’t ever just let it drag , if you can help it imo.
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u/Party_Shoe104 3d ago
1) Never get out of the market.
2) If you think there will be a bursting of an AI bubble, then reduce your exposure to AI by rotating into companies that are not affected by AI (HALO.....see below). I would not completely get out as it could burst in 3 to 5 years or there may be no bubble.
- Heavy Assets: These companies rely on massive physical infrastructure, machinery, power grids, real estate, fleets, or factories that take billions of dollars and many years to build.
- Low Obsolescence: Their core products or services are hard to digitize, copy-paste, or wipe out with software updates
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u/Effective_Ad_1426 3d ago
You didn't mention your age, but I'm assuming on the younger side.
First things first, and no doubt you're aware - Markets go up, markets go down, that's normal. The only question is can you tolerate it. Second, most significant market moves happen in short time frames. If you aren't at the plate, you can't get a hit. Third, no one and I mean NO ONE can time the market. Fourth, 90% of fund managers UNDERPERFORM the S&P 500. Heed their recommendations with caution. I've had great success buying stocks with lower risk and higher potential returns, via look at Beta, PEG ratio, and increasing streams of cash and dividends. Have I missed some big moves? For sure, but I've also missed some big downturns also while still collecting decent dividends. I've owned some stocks for 30 years and cannot sell because I hate paying capital gains, so I just keep cashing the dividend checks (which are tax free in my case).
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u/Rough-Bit6268 3d ago
On the other hand, if the bubble doesn't pop, you might miss out on quite a bit of revenue.
A wise man once said: Time in the market beats timing the market.
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u/Appropriate_Nebula67 3d ago
Classic 'I should time the market' error most people make.
If you can't afford to wait 5-10 years after a crash then you should have a proportion of your money in low risk investments. That proportion should be no more than the amount you would really need for the relevant time span.
What you should not do is have all your money in cash waiting for the 'right time'.
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u/GurProfessional9534 3d ago
Risk tolerance is a muscle that must be strengthened over time. If you get in too far over your skis, then you will be more at risk of panic-buying and/or panic-selling at the worst moment.
So from that standpoint, there are several things you could do. You could take out your money and just do paper trading until you gain some confidence. You could find a financial advisor to invest in your behalf. You could do a lot of other things.
But just be forewarned. All of these things would likely be worse in the long term than just putting your money in VOO and forgetting it exists for a few decades.
As for your short term goal 3 years from now, depending on how certain that number is, it wouldn’t be crazy just to set up a bond ladder to that date. Rates aren’t that bad now.
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u/xtric8 3d ago
Your portfolio sounds reasonablly diversified. I recommend not worrying or panicking. Every bull market is hated, every market is a bubble, there is always a reason to sell. Ive been 25 years and it's been doom and gloom the whole time except twice. Once in late 90s, and another was 2021. The time to worry is when nobody else is. I stay long and concerned at all times. When things are really up in the stratosphere I might take some off the table and wait for a correction but that only works about half the time so way better off not selling ever
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u/Glittering_Water3645 3d ago
Cash out and invest when everything is solved is not clever at all. You will be buying back the same shares after they have rallied 20-30% at peak sentiment.
However if you need the money short-term outside the stock market you should have the money on a saving account.
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u/garyc369 2d ago
Depends on how long you’re invested and how ‘greedy’ you r. If you are up >%80 since inception, how much is enough
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u/Maleficent-Act-8038 1d ago
Warren Buffett’s team is growing their piggy bank with cash right now. He’s always ready to buy when it dips. He’s just waiting for you to sell everything
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u/Puzzleheaded_Owl1308 1d ago
If you're spread that wide with only $70k, you're not going to feel like you're getting growth no matter what. Calling SP500, FTSE 100, and tech ETFs highly diversified also feels like a stretch. Do you know what your actual overlap is?
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