As discussions about artificial intelligence heat up markets and central banks warn of a bubble, stock market veterans such as Ray Dalio recommend increasing the share of gold in your portfolio. At the same time, there are strong voices to stay away from cryptocurrencies, and legendary investor Peter Lynch admits that he does not understand and does not invest in AI. What do the biggest names in the financial world advise?
Ray Dalio: Gold as a Hedge
Ray Dalio, founder of Bridgewater Associates, one of the largest hedge funds in the world, compares the current situation to the early 1970s and recommends maintaining a larger, 15% allocation in gold in the portfolio.
– Gold is a very good tool for portfolio diversification – he said. – If we look at it purely from a strategic asset allocation perspective, we should probably have around 15% gold in our portfolio because it is an asset class that appreciates when traditional portfolio components decline in value.
Dalio compares the current market environment to the 1970s, when inflation, massive government spending and high levels of debt undermined confidence in paper assets and currencies.
– It's very reminiscent of the early 1970s. Where to put your money? When you put it into debt instruments with so much debt supply, it's not an efficient way to store value, the investor said.
Peter Lynch: Invest in what you understand
Peter Lynch, the legendary investor who built a reputation for consistently beating the market in the 1980s when he managed the Fidelity Magellan fund, has some advice for the new generation of investors.
– I don't own a single share of AI-related companies – he admitted in the podcast “The Compound and Friends”. – I literally learned how to pronounce the word “Nvidia” about eight months ago.
When asked whether he thought the topic of artificial intelligence was overrated by investors, he replied that he had “not the slightest idea.” He emphasized that without understanding the technology, he is unable to assess whether the market is overvaluing it.
– I'm the least technologically advanced guy ever. I can't do anything on the computer. I only write down on yellow pieces of paper, he said.
Lynch reminds that investors must know well the companies in which they invest capital. – I have a saying: “you have to know what you have.” If you don't understand what you're buying, you're finished, he said. He also noted that the phrase “beat the market” is “terrible” and “dangerous.” Instead, investors should buy what they understand and know what they are doing, especially since stock price volatility on the New York Stock Exchange averages 100% over the course of a year.
Mohamed El-Erian: Gold is rising not only because of fear
Although the increase in gold prices is intuitively perceived as a reflection of market anxiety, Mohamed El-Erian, economic advisor to Allianz, draws attention to another aspect. “The jump in gold prices comes at the same time that risk appetite indicators – such as the S&P 500, Nasdaq 100 and Russell 2000 – are also at or near historic highs,” he notes.
According to him, the appreciation of gold is not solely due to investors' concerns. Rather, it is an attempt to respond to the “progressive fragmentation of the global economic and financial order.”
Goldman Sachs: It's too early to talk about an AI bubble
Peter Oppenheimer, a strategist at Goldman Sachs, in a published analysis calls for restraint in talking about a bubble in AI stocks, at least as long as the increase in stock prices is justified by an increase in company profits.
“Valuations in the technology sector are becoming overvalued, but they have not yet reached the levels of previous bubbles,” he says.
As he explains, bubbles form when valuations rise faster than projected cash flows. This time, the increase in valuations was driven by the prospects for business development, not irrational speculation. What's more, leading AI companies boast “exceptionally strong financial health.”
– The AI space is currently dominated by a few market veterans – he says, noting that bubbles are usually characterized by a large number of newcomers. Still, he recommends diversification to avoid the risks associated with a narrow rally in US stocks and growing competition in the AI sector.
Bank of England: Risk of sharp correction
The Bank of England, in turn, warned of an increased risk of a “sudden market correction”, especially in relation to companies from the artificial intelligence sector.
– The share of the 5 largest companies in the S&P 500 index reached approximately 30% and was the highest in the history of the last 50 years – it was stated in the summary of the bank's last meeting.
Increased geopolitical risk, fragmentation of global trade and high levels of public debt further compound the threats. “This, combined with increasing concentration in stock indexes, makes equity markets particularly vulnerable in the event that expectations regarding the impact of AI become less optimistic,” the document reads.
Hargreaves Lansdowne: Bitcoin is not an asset class
Hargreaves Lansdowne (HL), the largest investment platform for retail investors in the UK, has warned that bitcoin is “not an asset class” and should have no place in growth or dividend-oriented portfolios.
– HL Investment believes that Bitcoin is not an asset class and we do not believe that cryptocurrencies have characteristics that would justify their inclusion in portfolios seeking growth or income. They should not be relied upon to help customers achieve their financial goals, the statement said.
The company emphasizes that “analysis of the reasons behind cryptocurrency price changes is impossible, and unlike other alternative asset classes, they have no intrinsic value.” Nevertheless, due to customers' interest in speculation, the platform plans to enable them to trade cryptocurrencies from the beginning of 2026.
