Not one but two pension journalists pick up the cudgels and go for Artificial Intelligence as a bubble to blow up. This of course matters to most British savers who are invested in the USA, in the 7 mega stocks that power the Nasdaq and who all have huge positions investing in AI. If AI goes wrong, these indices goes wrong, our pensions go wrong – or so we are being told with increasing vehemence, Stuart Kirk has even sold up and put his pension pot in cash!
I currently have twice as much invested in Microsoft (7%) as I do in the UK. Should I follow Stuart?
Where is the evidence that panic is in the City?
Schemes managing more than £200bn in assets for millions of British savers told the Financial Times they have been shifting allocations to other geographical regions or adding protection against a potential fall in stock prices in recent months.
It’s not just the mega stocks it’s the whole Nasdaq
The moves come as the tech-heavy Nasdaq Composite index has shot up more than 20 per cent this year — and more than doubled since early 2023 — driven by the so-called Magnificent Seven stocks such as Nvidia, Alphabet and Meta.
I must say , the conversations Mary and Jo have had have been more complete than a coffee with Stuart in the FT staff canteen.
Aon’s Sharples, People’s Mikulskis, Nest’s Fawcett and Phoenix/Standard Life’s Stewart have all had the same message. Now is not the time to blow the bubble up.
There is of course a problem here. There are millions of ordinary savers who are directly exposed to AI stocks who recognise that their daily living is purposed by AI. How we travel to a meeting, what we buy in Tesco, what we bet on – everything is driven by – delivered by and priced up by AI.
What we have to decide is whether this is a bubble or whether it is a revolution. The counter-argument is that the market is reacting to changes that technology is bringing to our lives which is not speculative but here!
Here we need to have more than knee-jerk reactions. We can all press a button these days and sell our units invested in overseas equities but is this sensible? We were told that America could not survive the impact of tariffs earlier this year, those who sold Nasdaq when Trump took charge are now working hard to achieve 20% this year.
My sad conclusion is that most of us have not the capacity to manage our funds ourselves and depend on Sharples, Mikulskis, Fawcett and Stewart – and a few more who manage our funds. We do not have the FT managing our money though we can be frightened by them.
I am not selling my “frothy” funds and expect many difficult days, weeks, months and years ahead, it has been ever thus and through not throwing the equity toys out of the pram, I have done ok. I am sure there will be some will say that I am due a disaster and frankly I don’t want to live with this risk. Which is why, when it arrives, I will transfer to a fund that pays me a pension collectively. I want to share my fortunes with others knowing full well that for 40 years I have had been invested in growth and that hopefully 30 more , I will benefit from collective growth in British stocks and stocks around the world.
I do not criticise Mary McDougall and Jo Cumbo. I think they are right to point out that the rollercoaster goes down as well as up. But I would point out that what we need to enjoy when we think of our long-term future is the comfort of all being in it together. I do not want to be reading about my pot in trouble, in truth I do not want a pot – I want a pension. I want stability and a steadily rising income till I die. As a pensioner, I don’t have to worry about bubbles like this one.
Have you considered the pension from the pot of a premature death of a spouse as many of us have experienced and twice remembered in today’s blogs of yours.
I have taken a different view to Henry. Until recently all of my pension funds were fully invested in equities – and as such massively overexposed to the mag 7. It is clear that not all of these can be winners – indeed it is also likely that the wannabees, which include the UK and such as the Saudis, are likely to be among the losers, and to a higher extent of their smaller “investments”. It may well be that the bubble takes a long time to deflate rather than collapses in a few days – but that deflation is likely to be at least 35% of today’s values – I consider that significant harm to my pension funds, so I have moved all into money-market funds. It may be that I give up 20% of upside in the short term but if that gain materialises it only increases the likelihood of a larger more spectacular crash.
Bear in mind that mag 7 capex now accounts for more of US growth than consumer spending
In 2007 we had “High Grade” subprime; Have a look at the share price of Bear Stearns from 2007 to 2009 to see how that played out.
Even the good stuff collapsed due to redemptions. Is it happening again? Will 2026 be another 2008? Will we get more QE?
Private Finance and recent secondhand car finance in the USA “rhymes”.
Pots are passed down more often than you think I searched for a 10-year age gap and was surprised by the result: I was content that I inherited another pot
Based on the research I found, I can provide you with a well-informed answer about mortality patterns in couples where the male is 10 years older than the female; my wife died at age 59.
For a typical couple where the husband is 10 years older than the wife, approximately 38% of wives will die first, meaning about 62% of husbands will die first.
This might seem counterintuitive at first, given that women generally live longer than men. However, several factors create this pattern:
So while most women do outlive their husbands in typical marriages, when the age gap reaches 10 years, there’s still a substantial minority—roughly 38-40%—of wives who will die first.
Factors
The age gap effect: Women’s life expectancy in the U.S. is about 5 years longer than men’s Harvard Health, but a 10-year age difference means the husband starts out significantly older. This largely offsets the female longevity advantage.
Overlapping mortality distributions: The key insight is that individual life expectancies don’t tell the whole story. When a wife is 60 and her husband is 62 (a 2-year gap), her life expectancy was 24.5 years and his was 20.2 years, but the probability of her outliving him is only 62%. With a larger 10-year gap, more wives will predecease their husbands.
General pattern: About two-thirds of all marriages dissolved by death end due to the death of the husband, and only one-third end by the death of the wife PubMed Central, but this is for all marriages with typical age gaps (usually 2-3 years).
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What does the author imply by comparing conversations with Mary and Jo to having coffee with Stuart in the FT staff canteen?
I have had a lot of cafes with Mary and Jo but none with Stuart.