2026 Market & Investment Updates: How Far Can the AI Bubble Inflate?

In last year’s market & investment update, I wrote this ominous sentence:

“But if crypto prices crash and international stocks greatly outperform U.S. stocks in 2025, I will look silly (again).”

And, of course, that’s exactly what happened.

OK, crypto prices didn’t exactly “crash,” but Bitcoin and Ethereum were down by ~6% and ~11% for the year, following rapid rises in 2023 and 2024.

Meanwhile, both non-U.S. developed markets and emerging markets significantly outperformed the S&P 500 (~25 – 35% vs. ~16%).

I was up 30% for the year primarily because of substantial positions in silver (+148%!), gold (+65%), and non-U.S. stocks (+35%).

So, what happened?

Are we in an AI bubble, and if so, when will it pop?

And most importantly, have precious metals finally decapitated crypto and eaten its headless corpse?

Market & Investment Updates: My Current Portfolio

Here is my current portfolio as of January 1, 2026, with key differences vs. January 1, 2025, noted below:

• Equities: 53% [Up 1%]
• Gold: 14% [Up 4%]
• Crypto: 12% [Down 1%]
• Silver: 8% [Up 4%]
• Real Estate (Equity Funds + Owned Properties): 5% [Down 4%]
• Cash & Savings: 5% [Down 2%]
• Angel Investments: 3% [Down 1%; recorded at historical cost]
• Miscellaneous (Real Estate Loans, etc.): < 1% [No change]

The easiest way to understand the performance is to look at the main components with silver vs. Bitcoin in the comparison:

Silver resembled a meme stock this past year, while Bitcoin mostly stayed in “meh” territory.

Meanwhile, gold delivered its best performance since 1979, when it increased by 133% (!).

Precious metals had such a strong year that they distorted my auto-rebalancing in Wealthfront.

Normally, the service is supposed to rebalance frequently based on your targeted allocations, but the huge run-up in silver prices caused mine to drift by a good amount:

What I Changed in 2025, and Why

Unfortunately, 2025 was probably the busiest and most traumatic year of my life, so I could not spend much time on my portfolio.

I won’t share the full details here, but I was occupied by fun tasks/events such as:

• A disastrous move to another country that I had to reverse by the end of the year.
• The near-death of an immediate family member.
• Launching 2 new courses, 2 spin-off courses, and a new version of the infamous 400 Questions guide.
• Significant time and money spent on new course and subscription ideas, account security, and experimental promotions.

So, I mostly kept my allocations from the start of 2025, rebalanced a bit, and automated more of my monthly processes.

But I will note a few smaller changes:

• Equities: Throughout 2024, I shifted my allocations to U.S. stocks, which turned out to be a mistake for 2025. But I ended up with lower-than-planned percentages in U.S. stocks due to gold/silver performance (see above).
• Crypto: I increased my cost basis by ~10% over the course of the year via newly set-up recurring monthly purchases, but this ended up hurting me because of poor Bitcoin and Ethereum performance this year.
• Individual Stocks – I had virtually no time to trade merger arbitrage or long/short equity I plan to wind down this activity because I am extremely unlikely to have the time to do it properly anytime soon.
• Real Estate – Finally, I sold most of my investments in private real estate funds. I still hold a few positions in a retirement account, plus my property in Florida, but nothing else for now.

What Helped and Hurt in 2025? And Why?

Precious metals and non-U.S. markets had a spectacular year, rising by far more than anyone expected.

Meanwhile, trades that had worked well in 2023 and 2024, such as crypto and Big Tech stocks, underperformed both of those.

But the more interesting question is why this happened.

I don’t think you can narrow it down to a single cause, but my explanations would be:

1) USD Value Loss and Skepticism Over U.S. Trade / Immigration / Foreign Policy – This one explains a lot about why emerging markets and non-U.S. developed markets outperformed this year. The USD fell ~9%, its largest loss since 2017, largely due to Trump’s policies on tariffs, general instability, and possibly the immigration crackdown.

2) Central Banks and Fiscal Dominance – Almost every country in the top 20 economies worldwide is running a substantial fiscal deficit, which leads to more money printing by central banks. That, along with falling interest rates, incentivizes investors to buy more precious metals to hedge against inflation risk.

But… central banks themselves have also become huge buyers of gold! Visual Capitalist has a great breakdown of the data, which shows that central banks roughly doubled their annual gold purchases in 2022 – 2024 vs. 2014 – 2016.

3) Overvalued U.S. Stocks – Investors finally seemed to wake up to the fact that many large-cap/tech stocks were ridiculously overvalued and quite disconnected from their future growth potential. Of the Big Tech stocks, only Google and Nvidia beat the S&P 500 for 2025.

4) Crypto Got Ahead of Itself – Finally, markets can be “emotional,” and I think crypto investors got too ahead of themselves with the end-of-2024 rally. Yes, the current U.S. administration is very crypto-friendly, but that doesn’t necessarily mean market prices will double each year. If investors used too much leverage to buy crypto (which seems likely), a correction was inevitable.

You’ll notice that “AI” isn’t on this list because I don’t believe it has much to do with budget deficits, central banks’ actions, the USD’s decline, or poor crypto performance.

Some people have argued that AI-adjacent stocks drew investor attention away from crypto, which explains its decline in the final 3 months of the year, but I’m skeptical.

Nvidia and Tesla barely changed in October – December 2025, Facebook and Microsoft fell, and only Google rose significantly.

In fact, I would argue that these trends are related.

Despite their size, the Big Tech firms are effectively “speculative stocks,” in a similar risk / potential return category as crypto.

They’re not the same because one set generates cash flows and the other does not, but they may occupy similar headspace for many investors.

So, as skepticism about AI CapEx grew, there was probably some spillover into crypto as well.

Are We in an AI Bubble? How Does That Affect the Markets?

This could be a whole separate article (maybe I’ll cover it soon), but the short answer is yes, segments of the current AI market seem quite bubbly.

Assuming the bubble eventually pops, most of the damage will be limited to VC-backed startups that fail or get acquired at low prices.

Since credit is heavily involved in data center financing, many private credit firms are also likely to take a hit.

My prediction is that, eventually, many lenders will say “no” to a high-profile deal, which will lead to more deals falling through and a pullback in the sector.

Arguably, this already happened with Blue Owl and a $10 billion data center deal for Oracle.

A similar sequence of events occurred in the summer of 2007, right before the 2008 financial crisis.

The real questions are the timing and how much spillover there will be into the public markets.

I have no idea of the exact timing, but I would be shocked if this continues for, say, 3 – 5 years without a correction.

So any correction or crash will likely happen sooner than that, but I have no strong opinion about whether it’s a 2026, 2027, or 2028 event.

All the Big Tech companies will take a hit, but some, like Apple, will be fine, while others, like Nvidia, could fall significantly.

This matters because the S&P 500 is market-cap-weighted, so these Big Tech companies account for 30 – 40% of the index.

And since many investors are overweight U.S. stocks, they’ll be very exposed to any type of AI crash or correction.

Market & Investment Updates: So, What’s Next for 2026?

So, considering everything above, what is the best approach to investing in 2026?

From my perspective, the two most important points are:

1. The Macro Picture is Almost the Same – Sure, higher tariffs changed things a bit, but nearly all large economies are running ridiculous deficits, expanding the money supply, and heading into a demographic doom loop as birth rates fall and pension systems go bankrupt. So, if anything, volatility will likely increase.
2. Almost Everything is Expensive – We covered Big Tech and U.S. stocks above, but I would argue that gold, silver, and even some non-U.S. stocks have also become quite expensive. You can’t value precious metals via a DCF, but the M2 Money Supply / Gold chart shows that we’re right around the ratio last reached in 2011.

I don’t think it makes sense to move to cash or “short the market” because it’s almost impossible to time it right, and even if you do, you might buy back in at the wrong time.

So, I am thinking about the following options for 2026:

1. Sell Gold / Silver / Crypto and Reallocate to Non-U.S. Stocks – Yes, prices are higher now, but there may still be higher potential upside here. It seems many investors still haven’t caught on to the performance of non-U.S. equities and will take another few years to bid prices up.
2. Switch to an Equal-Weighted U.S. Stock Index – This strategy doesn’t always work, but it can be a useful hedge if the main concern is a Big Tech correction.
3. Buy SPY Put Options – But I’m a bit reluctant to do this because many things need to go right for put options on an entire index to pay off. I’ve also lost money doing this before, such as in 2020, when I was correct about a ~20% market correction but wrong about the timing.

All that said, I’ll be a bit disappointed if things simply continue as they are right now.

DOGE didn’t deliver much in terms of substantial deficit cuts, tariffs didn’t crash the economy (yet), and while there were a few notable bankruptcies in 2025, we didn’t get anything like Silicon Valley Bank or Credit Suisse from 2023.

So, finance just feels a bit boring and “samey” now.

I would like to see at least one bubble pop so everyone can stop speculating about when it will.