Jamie Dimon, CEO of JPMorgan Chase, is one of the most respected voices in American business. When he raises concerns about the stock market, it's worth paying attention. In a recent interview with Wilfred Frost on the Master Investor Podcast, Dimon said that the stock market feels a little too complacent about risks.
He issued a warning about the artificial intelligence (AI) boom, drawing on what happened during the dot-com boom (and bust) of the late 1990s. When asked about risks facing AI stocks, Dimon said: Missed Nvidia in 2009? This Rare Signal Is Flashing Again.
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » When I look at AI itself, the amount of money being spent is huge.
Will it pay off in total? Probably, just like the internet did. Will it pay off the way you expect and the timetable you expect?
Dimon also mentioned that before the long-term winners of the internet stock era like Alphabet emerged, there were bankruptcies and failures among former dot-com darlings like Yahoo! and Netscape. No one knows yet which stocks will be the long-term winners of the AI trade. So how should you invest?
Based on long-term stock market history and what happened to internet stocks 25 years ago, smart investors will continue investing in broadly diversified portfolios of stocks based on fundamentals and long-term growth potential -- not short-term hype. If you agree with Dimon's assessment that AI is likely to pay off in the long run, let's look at two exchange-traded funds (ETFs) that are worth considering today. If you don't know which stocks will be the big winners of AI but believe the U.S. stock market will go up in the long run, one simple move is to buy the Vanguard Morningstar Total Stock Market ETF (NYSEMKT: VTI).
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