AI is forcing me to change how I manage my money. You see, I've made millions from investing over the past 35 years. And most of that success has come from one simple strategy.
>> An S&P 500 lowcost index [music] fund >> S&P 500 index fund like >> S&P American >> the S&P 500 >> the S&P 500 [music] >> has returned an average of over 10% per year. >> This is known as passive [music] investing as your money automatically gets split between the top 500 companies [music] in the USA. So rather than having to actively pick winning stocks, you instead just buy a small piece of all of them.
The idea is that even if some stocks crash, [music] owning lots of them protects you and you still benefit as the overall market grows. I'm not going to lie, over the years, this has been proven to be a fantastic strategy. As I've said, I've earned millions doing exactly this.
However, after making my last video about a potential AI bubble, I sat down, reviewed my investments, and made a few changes. So, in this video, I'm going to be revealing the five things I changed because of AI. Believe it or [music] not, for every dollar you invest into the S&P 500, 40 cents of it will go into just 10 companies.
These companies are Nvidia, Microsoft, Apple, Alphabet, Amazon, Broadcom, Meta, Tesla, Berkshire Hathaway, and finally JP Morgan. As of filming this video, these companies currently make up a whopping 40% of the entire index fund. What's even more concerning is that Nvidia alone will get between 7 to 8 cents of every dollar you invest into the S&P 500.
This is because the index fund is called market cap weighted, which simply means the more valuable a company becomes, the bigger slice of the fund it takes up. So what's actually causing these companies to become more and more valuable? Well, if we put Berkshire Haway and JP Morgan to one side for a moment because they don't really fit the same pattern, something interesting starts to happen.
What we're left with is a group of companies that share one very specific trait. They're all spending aggressively on the same thing, AI. You might be thinking, "That's great.
AI is the future. So, this all makes sense. " However, not so fast.
For all these AI companies to justify their current valuations, they would need to make around $2 trillion in revenue. To put that into perspective, that's more than Nvidia, Microsoft, Apple, Alphabet, Amazon, and Meta combined in 2024. This shows these companies at the top of the S&P 500 aren't being valued based on what they earn today, but on what investors expect them to earn in the future.
Now, this isn't a major issue on its own, as it's very common for companies to be valued on their future potential. However, it is quite worrying when it's all linked to one type of technology. These companies are all essentially making the same bet that AI is the future and they're financing it with a ton of debt.
A great example of this is Sam Orman saying he's willing to commit $1. 4 trillion in spending for AI infrastructure when his company Open AI is currently only making 13 to 20 billion in yearly revenue. A lot of this debt is also pretty hidden.
As I discussed in my last video, these companies are bumping up their valuations by passing money around to each other. It's a whole complicated mess. Long story short, it's all a massive feedback loop that keeps reinforcing itself.
Bigger companies attract more passive investment, which pushes their prices higher, giving them a bigger share of the S&P 500 and therefore even more money to grow from passive index fund investors just like us. This is having a knock-on effect of making the US economy look strong. However, data from Deutsche Bank actually argues that if it wasn't for AI spending right now, then we'd already be in a recession.
So, what if instead of prioritizing the biggest companies, we could spread our money equally across every company in the S&P 500? Well, we actually can with something called an equal weighted S&P 500 index fund. And on the surface, it looks like the perfect solution.
Instead of having 40% concentrated in the top 10 stocks, it's around 2% as every company is treated equally. By investing in something like this, there is no doubt that you're less exposed to the potential AI bubble that's currently forming. However, it's not the perfect solution because by trying to limit the money going into larger companies, it might actually lead to a much bigger problem as it follows something called a negative momentum approach, which sounds complicated, but it's really not.
All it means is that when a company in the S&P 500 starts to take off, think Tesla during its big run, the fund automatically sells some of it as it rises and uses that money to buy companies that haven't gone up. So, you're effectively selling the winners and buying the losers purely to keep everything balanced. On the flip side, a normal S&P 500 index fund that's market cap weighted doesn't need to trade nearly as often.
When a company gains momentum, it's simply allowed to take up a bigger share of the index. Instead of trimming the winners, the fund gradually reduces exposure to smaller companies to make room for the larger ones. But why does this matter?
Well, the more a fund trades, the higher the costs are. Therefore, it's something that's often overlooked and can eat [music] into your gains. That's why although I'm putting less money into the S&P 500, I'm still keeping the majority of my stock market portfolio in the regular market cap weighted version.
So now I freed up some of my money from the S&P 500. The real question is where is it going? Well, that brings me on to I want you to imagine for a moment that the biggest stock market returns over the next 20 years don't come from the USA.
I know that might sound crazy because for the last 14 years, the American markets have absolutely dominated. However, this chart shows which countries made up the largest share of the world's stock market at different points in history. And guess what?
It hasn't always been the USA. I know this looks a bit confusing, but it's effectively showing the global stock market just like a cake with multiple layers. Each color represents a different country and the thickness of each layer shows the percentage of the world's stock market that country makes up at that point in time.
The cake itself doesn't change. It's always the global market. What changes is which layers get thicker and which ones get thinner.
Let's look back at 1900. The United Kingdom was the global superpower. As you can see, they had a nice juicy 24% layer of the global stock market cake.
London was the financial capital of the world. British companies dominated global trade and the empire stretched across huge parts of the globe. If you were investing at the time, it would have felt completely obvious that the UK would remain the dominant economic force for the next h 100red years.
Investing anywhere else would have seemed ridiculous. And yet, that's not how history played out. I remember seeing something very similar happen later with Japan.
I went to Japan a lot throughout the late 1980s and early 90s. And at the time, Japanese companies were performing incredibly well, particularly in areas like cars, electronics, and technology. Meanwhile, the US economy was struggling.
Inflation was high, growth was slowing, and a lot of people believed that Japan was the future. So, if you were investing back then, would you have bet against Japan and doubled down on America? Probably not.
However, America bounced back big time. This shows the only thing that's ever been certain in markets is uncertainty. Leadership changes, economic dominant shifts, and no country stays on top forever.
Which is exactly why I don't want my portfolio to rely entirely on one market, even one as strong as the US. Because when you only invest in the S&P 500, you completely miss out on companies like TSMC, Samsung, Toyota, Tencent, Astroenica, and HSBC. These are global businesses operating at huge scale, driving real growth, yet they're excluded purely because of where their headquarters are based.
So, how am I actually investing globally? Well, this is Trading 212. It's the broker I personally use.
And if you go to the search bar and type in VWRP, you'll find this global stock market fund that gives you instant exposure to pretty much the entire world's economy. This single fund invests in around 3,700 to 3,800 companies spread across more than 45 developed and emerging countries including the US, UK, Europe, Japan, and fast growing economies like China and India. And yes, I know if you dig into what these funds actually hold, you'll see they're still heavily dominated by US companies.
The difference is what happens over time. A global fund automatically rebalances. If the US becomes less dominant and China or another country starts outperforming, the fund adjusts.
If the US continues to lead, it adjusts for that, too. It also has an extremely low expense ratio of 0. 19%.
That means for every $1,000 invested, you're paying roughly $1. 90 annually in fees, which is pretty cheap. If you're based in the USA, then I'd recommend looking into Fidelity's international fund with the ticker FSPSX.
If all this sounds a bit complicated, Trading 202 actually make it really simple with their model pies. These are pre-built, globally diversified portfolios put together by professional asset managers, and you can easily choose a risk level that feels right for you. Since I was planning to talk about Trading 212 anyway, I reached out to see if they'd like to sponsor this portion of the video.
They agreed and are giving you free fractional shares worth up to £100 when you scan this QR code or enter the promo code Tilbury by tapping this menu and heading to the promo code section. If you're new to investing, then you can put in as little as £1. Claim your free fractional shares and start exploring the app before fully jumping in.
You can also invite your friends, and once they fund their accounts, you'll both get free fractional shares. The best piece of advice I've ever been given about building real wealth is that you don't get rich by following the crowd, you get rich by being early. I've applied this thinking throughout my whole life.
So, as well as protecting myself against the potential AI bubble, I also think it's important to look for a way to benefit from this new technology. So, let me talk you through where I see the biggest opportunities at the moment. The market naturally breaks down into four clear zones, each one filled with different types of companies.
Well, that's how I look at it. Anyway, let's start with this one. I call it the crowded zone.
Companies in this zone have a large market cap and expensive valuation. Think the top companies in the S&P 500 such as Nvidia, Tesla, and Meta. It's crowded as everyone is already investing here, even passive investors.
Under that, we have the defensive zone. This includes companies like McDonald's, Walmart, and CocaCola. These are businesses that people rely on no matter what the economy is doing.
These are the kinds of companies value investors like Warren Buffett love. Their valuations aren't low, but they're good value because their earnings are predictable, demand is stable, and they keep generating cash year after year. In the top left is the speculative zone.
These are smaller companies that are extremely hyped and have valuations that far exceed their current revenue. They usually have low or modest market caps, but very expensive stock prices because investors are betting on massive future returns. Examples include companies like Beyond Meat, Pelaton, and AMC during their hype phases.
I personally stay away from these kinds of investments as they're highly speculative and driven by momentum and internet hype. If you ask me, it's closer to gambling. That brings us to this one.
I call it the overlooked zone. Now, this is where I believe there is a ton of opportunity, especially when it comes to AI. Let me explain.
The companies in this crowded zone are all betting on the fact that whoever spends the most money developing [music] the absolute best AI model will have all the profits. But what if that isn't the case? A pattern I'm seeing more and more amongst startups, small cap, and medium cap companies is they're actually giving the user the ability to pick between different AI models within their software.
They let users choose between Claude, Chat GPT, and Gemini, just to name a few. This is important because they're now all getting pretty close in abilities. So, the biggest factor in what a user chooses might end up being the price, which would then lead these companies into a price war, which is great for people using AI, but not so great for huge companies that have spent billions developing these AI models.
It's kind of like petrol or gas if you're American. Imagine one station sells it for $1. 50 per liter and another sells petrol that's slightly better quality for $3 per liter.
Sure, a few people will still pay the extra for the premium option, but most people will just buy the cheaper fuel because it pretty much does the same thing. And that's the real point. When new technology becomes good enough and interchangeable, the value doesn't stay with the companies that spent the most money building it.
It flows to the companies that use it in the smartest way. So, that's exactly why I'm backing the underdogs. Small and midcap businesses don't need to win the AI arms race.
They just need to apply AI to real problems at a lower cost without carrying billions in debt. That's why I'm investing in a couple of small and midcap funds as well as actively looking for AI startups to invest in. So, if you're a founder and you're looking for an experienced investor with a large social media following, then feel free to reach out using the email in the description.
I'm currently considering proposals. Look, if I'm wrong, I lose a small amount being early. But if I'm right, I'm positioned where there could be a massive upside.
I [music] feel like a lot of people don't understand that every major leap in technology creates opportunity, but more importantly, instability. I mean, AI isn't just changing companies. It's changing power, currencies, and trust in the system.
That's why I'm increasing my gold reserves. And I'm not alone. Check this out.
This chart shows China's gold levels between 2009 and 2025. Up to 2023, they were steadily buying gold. But as you can see, in recent years, they've been buying up more gold than ever.
But why does this matter for everyday investors like us? Well, many people believe China is trying to replace the US dollar as they're not just buying it quietly, they're making it usable. They've been building something called the gold corridor which allows gold to be stored across different locations and used as a form of trust in international trade especially with Brazil, Russia, India and South Africa otherwise known as the BRICS nations.
And it's not just China. Gold has now overtaken US treasuries as the world's largest foreign reserve asset held by central banks worldwide for the first time since 1996. So why are we seeing this sudden shift towards gold?
Well, as of 2025, gold has been reclassified as a Basel 3 tier 1 asset. Put simply, gold can now be treated the same as cash or US treasuries on a bank's balance sheet, which is a big change because before this reclassification, banks weren't allowed to count its full value. This is having a big effect on the price of gold because before this change, most financial institutions like central banks, sovereign wealth funds, and pension funds kept around 20% of their reserves in gold and equivalent hard assets.
However, the Bank of America have now published new guidelines saying that gold reserves should be closer to 30%. That 10% increase is driving up demand because you can't print more gold. Some people are even saying in 5 years gold could be worth double what it is today.
And I don't think that's absolutely unreasonable. [clears throat] I won't go much deeper into gold in this video, but if you want me to break it down in more detail in a future one, just give this video a thumbs up and let me know. If we get, let's say, 150,000 likes, then I'll make one right away.
For now, let's skip to the part I know a lot of you care about. How do you actually invest in gold? I personally do it a couple of different ways.
Firstly, I buy physical gold. This is my long-term insurance and as I'm old school, I like having something I can actually hold. Secondly, I dollar cost average into this EyesShares physical gold ETF on Trading 212.
I like doing this because it gives me a lot more flexibility to gradually buy in and move things around when I need to. So, to be clear, I'm not trying to buy at the best possible time, and I'm also not going all in on gold. I'm simply allocating a small strategic portion of my portfolio to gold.
the same way countries and major financial institutions are doing. The biggest mistake young people make when investing is not having a big enough cash reserve in case something happens in their life, which often forces them to sell their investments at the worst possible time. Even as an older guy, this is still something I have to consider, especially if we're in an AI bubble.
And you might be interested to know that Warren Buffett, the [music] most successful investor of all time, is currently increasing his cash pile. [music] Check this out. As you can see, he's been aggressively increasing his cash pile over the last couple of years.
And as of Q1 2025, he has a whopping 347. 7 billion in cash and cash equivalents. This makes sense as he's a value investor and only buys when the price makes sense.
[music] And right now he simply doesn't see many opportunities that justify putting that cash to work. That's why I'm going to be holding slightly more cash [music] because if the markets crash, I don't want it to negatively affect my life. Having a bit more cash on hand also gives you the opportunity to buy more investments when the market crashes.
And I say when, not if, [music] because it always happens at some point. I was also focused on improving my money-making skills during the com crash in the early 2000s. [music] And that came in super handy as I was able to generate fast money that I could then invest into the stock market.
On that note, I'm actually teaching you the fastest path to making $10,000 a month online without needing startup capital or business experience [music] in a free live online event very soon. So, if you're serious about increasing your income, then make sure to sign up for that. I'll leave a link in the description.
This is super important because cash is king during a stock market crash. I've seen way too many people wait years for a market drop and miss out on massive gains in the process. That's why my strategy is simple.
I'm still going to keep putting most of my money into the S&P 500 so that if AI continues driving growth, I'm invested in the businesses leading that change. But to protect myself from a potential AI bubble, I'm also diversifying into the global markets, small and midcap stocks, gold, and cash. Because the truth is, nobody knows what the market will do next.
[music] So instead of trying to predict it, I'm preparing for both outcomes. If you want to learn exactly how to invest for beginners step by step, then I'm going to leave that video right up there. But don't click on it just yet.
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