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Where to Invest $10,000 Amid AI Hype and Economic Uncertainty

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  Published in Stocks and Investing on Wednesday, December 31st 2025 at 0:43 GMT

Navigating Uncertainty: Where to Put Your $10,000 Amidst AI Hype and Economic Concerns

The rapid rise of Artificial Intelligence (AI) has captivated investors, driving significant gains in related stocks and sparking conversations about a potential "bubble." With economic uncertainty lingering – including persistent inflation, rising interest rates, and the possibility of recession – many are questioning where to best allocate their investments. A recent MSN Money article consulted eight Wall Street professionals to get their perspectives on how to invest $10,000 in this complex environment. The consensus isn't a single "buy everything AI" strategy; instead, it’s a nuanced approach emphasizing diversification, value investing, and considering alternative asset classes.

The AI Hype: A Cause for Caution?

The article acknowledges the transformative potential of AI. Companies like Microsoft (with its partnership with OpenAI) and Nvidia (a key supplier of chips powering AI applications) have seen their stock prices soar. However, several experts expressed concern about valuations becoming detached from reality. As noted by David Rosenberg, founder of Rosenberg Research, the current enthusiasm surrounding AI resembles past tech bubbles, such as the dot-com boom. He cautions against blindly chasing performance and emphasizes a focus on fundamentals. This sentiment is echoed by many analysts who believe that while AI will undoubtedly reshape industries, the hype has inflated some companies' stock prices beyond sustainable levels. The fear isn’t necessarily that AI itself is worthless; it’s that investors are overpaying for exposure to it.

Diversification Remains Key: Beyond Just Tech

Across all eight experts interviewed, diversification was a recurring theme. Putting all $10,000 into AI-related stocks would be considered overly risky. Instead, the professionals suggested spreading investments across various asset classes and sectors.

• Broad Market ETFs: Several advisors recommended low-cost index funds or Exchange Traded Funds (ETFs) that track broad market indices like the S&P 500. These provide instant diversification and capture overall economic growth. Vanguard's Total Stock Market ETF (VTI), for example, is a popular choice.
• Value Stocks: With growth stocks – particularly in the tech sector – potentially overvalued, value investing becomes more attractive. Value stocks are those that trade at a lower price relative to their fundamentals (earnings, book value, etc.). These companies often have strong balance sheets and consistent profitability, making them less susceptible to market volatility. The article highlights the iShares MSCI USA Value Factor ETF (VLUE) as an example of a fund focused on this strategy.
• Small-Cap Stocks: Some advisors suggested allocating a portion to small-cap stocks, which often have higher growth potential than larger companies. However, they also carry greater risk and volatility. The iShares Russell 2000 ETF (IWM) is a common way to gain exposure to this segment of the market.
• International Stocks: Diversifying geographically is crucial. Investing in international stocks can reduce portfolio risk by exposing you to different economies and growth opportunities. The Vanguard Total International Stock ETF (VXUS) offers broad international exposure.

Alternative Investments: Exploring Beyond Traditional Assets

Beyond traditional stocks and bonds, the article also explored alternative investments that could provide diversification and potentially higher returns.

• Real Estate: Real estate investment trusts (REITs) offer a way to invest in real estate without directly owning property. They can provide income through rental payments and potential appreciation. The Vanguard Real Estate ETF (VNQ) is a popular option.
• Commodities: Commodities like gold and oil can act as a hedge against inflation and economic uncertainty. While volatile, they often perform differently than stocks and bonds.
• Treasury Inflation-Protected Securities (TIPS): TIPS are designed to protect investors from inflation by adjusting their principal value based on changes in the Consumer Price Index (CPI). They offer a relatively safe haven during inflationary periods.

Specific Recommendations & Portfolio Allocations:

While there was no single, universally agreed-upon portfolio, here's a synthesis of common themes and suggested allocations:

• Sarah Ketterer (Chief Executive Officer, Causeway Capital): Advocates for value investing, suggesting focusing on companies with strong fundamentals and reasonable valuations.
• David Rosenberg (Founder, Rosenberg Research): Emphasizes caution regarding AI hype and recommends diversifying across asset classes to mitigate risk. He's particularly wary of overvalued tech stocks.
• Ben Axlerod (Chief Investment Officer, One Capital Management): Suggests a blend of value stocks, small-cap stocks, and international equities.
• Other advisors: Generally recommended allocating between 20-40% to US Equities (with a focus on value), 10-20% to International Equities, 5-10% to Small Caps, and the remainder split between bonds, REITs, and potentially commodities or TIPS.

The Importance of Long-Term Perspective & Professional Advice:

The article consistently stressed the importance of adopting a long-term investment horizon. Market fluctuations are inevitable, and trying to time the market is often counterproductive. The professionals emphasized that any investment strategy should align with an individual's risk tolerance, financial goals, and time frame. Finally, they strongly recommended seeking advice from a qualified financial advisor before making any significant investment decisions.

Conclusion:

Investing $10,000 in today’s market requires careful consideration of both the opportunities presented by AI and the risks associated with economic uncertainty and potential market corrections. Diversification across asset classes, a focus on value investing, and a long-term perspective are crucial for navigating this complex landscape. While AI holds immense promise, avoiding the pitfalls of hype and maintaining a balanced portfolio remains the most prudent approach to achieving financial goals.

I hope this article provides a comprehensive summary of the MSN Money piece! Let me know if you'd like any adjustments or further elaboration on specific points.