00:00Your retirement savings are fueling the AI boom, and you might not even know it.
00:04The AI boom is affecting your 401k. Here's how. So most 401ks are cap-weighted. That means a 401k
00:11is invested across the market, but there is a particular lean towards the biggest companies.
00:16In this case, that means the Magnificent Seven, which are getting bigger than ever as we see
00:21multi-trillion dollar companies. Now, this is all pretty standard practice. However,
00:26there is a new risk involved, and that is the fragility introduced by the AI bubble.
00:32There's an underlying assumption in a lot of the economics of these companies right now that
00:35assumes the boom will stay booming. But if the bubble bursts, it is highly likely you will see
00:41it in your 401k, very akin to the crashes of the past, like the dot-com bubble burst.
00:46One expert I talked to gave me an example. If Tesla crashes, and for some portfolios,
00:51Tesla can be as much as 3% of that portfolio, you will see that reflected
00:55in your 401k when you check in on whoever your provider is. It will be unmissable.
01:00For those concerned, you have options. You can look at equal-weighted funds,
01:03or you can consider more unconventional strategies. One expert I spoke to for the story
01:08suggested possibly looking at a strategy around buying everything but the Magnificent Seven.
01:13The idea behind that is you would completely bypass possible volatility in the Magnificent Seven
01:18were the bubble to burst. For more of what this means for your investments,
01:22you can check out my full article on fortune.com.
