The AI Bubble Burst Looms: How to Make Defensive Investments

The S&P 500's heavy tech weighting is exposing investors to the AI bubble's potential collapse. Index funds now 40% tech-heavy, with Alphabet, Amazon, Microsoft and Meta expected to invest a combined $700 billion in AI this year, leaving portfolios vulnerable. Jim Paulsen warns that fading risk aversion is making portfolios riskier, increasing the chance of disappointing results. The widening gap between 'new era' and 'old era' stocks, with defensive stocks underperforming, highlights the inadequacy of diversification. What defensive strategies should be considered as the AI bubble bursts? How will markets react to this scenario?