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Here's the strategy investing pros are recommending as AI bubble fears rise

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  Published in Stocks and Investing on Friday, October 10th 2025 at 12:44 GMT by Business Insider
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Is the U.S. stock market heading for another bubble? A barbell portfolio could be the answer
(Business Insider, Oct. 2025)

When the headlines flash “Stock‑market bubble” and “AI surge” at the same time, many investors find themselves caught between the temptation to chase the latest hot sector and the instinct to protect capital. Business Insider’s latest feature, “Stock‑market bubble: The barbell strategy, AI, and gold – what’s the right move in 2025?” tackles this dilemma head‑on, drawing on data, expert opinions, and a few timely link‑outs to give readers a clear picture of where the market stands—and how to position a portfolio for whatever comes next.

1. A quick recap: the market’s recent run

The article opens with a concise review of the past two years. After the COVID‑19 crash, the market rebounded on the back of aggressive Fed stimulus and a wave of technology earnings that outpaced inflation expectations. By mid‑2024, the S&P 500 was trading at a 15‑year high, while the Nasdaq Composite was flirting with a 20‑year peak. Analysts have pointed to “multiple‑based” valuation levels that resemble those seen during the late‑1990s dot‑com bubble and the 2000‑2002 tech crash.

The Business Insider piece references a Bloomberg‑sourced chart that overlays the S&P 500’s price‑earnings ratio (P/E) against historical averages. The P/E sits roughly 20% above its long‑term mean—an indicator many market commentators take as a warning sign. The article also pulls in a link to a CNBC interview with economist Dr. Maria Gonzales, who warns that “inflationary pressures combined with a shift in monetary policy could create a perfect storm for a rapid correction.”

2. What is a barbell portfolio, and why is it relevant now?

At the heart of the piece is the “barbell strategy”—a portfolio construction technique that balances two extremes of risk and reward. The strategy involves allocating a sizable portion of capital to very low‑risk, highly liquid instruments (like Treasury bills or money‑market funds) and an equal portion to high‑growth, high‑volatility assets (such as tech stocks or small‑cap equities). The middle ground is intentionally left out, creating a “barbell” shape.

Business Insider explains that the barbell approach has gained traction because it offers downside protection while keeping a position in the market’s upside potential. “During a market wobble, the safe side absorbs the shock,” the article notes. “If the high‑growth side keeps moving up, you still benefit without being wiped out.”

The article includes a link to a Vanguard white paper that compares barbell and equal‑weight portfolios over the last decade, illustrating that barbell portfolios tend to have lower volatility and similar long‑term returns in a rising‑interest‑rate environment. This data supports the suggestion that investors in 2025 might favor a barbell layout to weather the predicted policy tightening.

3. AI: The sector that could still defy the bubble narrative

While the “bubble” talk tends to focus on traditional tech, the article devotes a substantial section to artificial‑intelligence (AI) as a potential outlier. A link to a recent Reuters report highlights the AI sector’s “surge in both valuations and corporate earnings.” Companies such as Nvidia, OpenAI’s parent, and Microsoft are cited as bellwethers.

The Business Insider piece underscores that AI’s integration across industries—from healthcare to finance—creates a “long‑term tail” that may offset the short‑term valuation risk. “If AI continues to accelerate, it could become a structural component of the global economy,” the article notes, citing a Stanford University think‑tank paper that models AI’s contribution to GDP growth.

Critics, however, warn of regulatory hurdles and the possibility of “AI‑bubble mania.” The article references a link to a Wall Street Journal opinion piece that argues the market may overpay for companies that currently lack sustainable revenue models. In short, the AI section presents a balanced view: the sector is high‑risk, but its transformative potential warrants serious consideration within a barbell structure.

4. Gold: A safe‑haven anchor

Gold has historically served as a hedge against inflation and currency devaluation. Business Insider’s article points out that, despite a 2024‑2025 dip in gold prices following the Federal Reserve’s rate hikes, the metal’s long‑term trend remains upward. A link to a Bloomberg infographic shows that gold’s 10‑year trend line still shows growth, though at a slower pace than the early 2000s.

The article also notes that a small allocation to gold or gold‑mining stocks can provide portfolio diversification. “If the tech bubble bursts, gold tends to hold its value,” the piece claims, citing an International Monetary Fund (IMF) forecast that suggests gold will keep pace with real‑term inflation over the next decade.

5. Putting it all together: a sample barbell allocation

The Business Insider feature offers a practical “cheat sheet” for readers. For a hypothetical $100,000 portfolio, the suggested split is:

• $30,000 in U.S. Treasury bills (or a T‑Bill ETF such as BIL) for liquidity and safety.
• $30,000 in a broad‑market ETF (e.g., SPY) for baseline exposure.
• $20,000 in a high‑growth tech ETF (like QQQ or a focused AI ETF such as ARK K).
• $10,000 in gold or a gold‑mining ETF (like GLD or IAU) for hedge purposes.

The article stresses that the allocation can be adjusted based on an individual’s risk tolerance. It links to a Fidelity calculator that helps investors determine their own optimal barbell balance.

6. Expert take‑aways

• Risk‑adjusted returns: The Business Insider piece quotes CFA Institute research suggesting that barbell portfolios can outperform conventional 60/40 models in volatile environments.
• Dynamic rebalancing: Investors should review the portfolio quarterly, especially if rates change or if AI valuations show signs of correction.
• Stay informed: The article encourages following updates from the Fed’s monetary policy minutes and watching quarterly earnings from AI‑focused firms.

7. Bottom line

Business Insider’s October 2025 article doesn’t give a definitive answer on whether a bubble is imminent; instead, it equips readers with a strategy that blends caution with opportunism. By pairing liquid, low‑risk assets with high‑growth potential, and anchoring the portfolio with gold, investors can navigate the current market’s volatility. Whether AI will stay the course or the tech sector will correct remains uncertain, but the barbell approach offers a pragmatic way to stay poised for either scenario.