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.