Are you still betting on Trump's America? By Christy Bieber. According to the White House, now is the golden moment to bet on U.S. assets. Trump himself has said that thanks to his policies, America is "raking it in." But not everyone believes this prosperity can last — including Elon Musk, the world's richest man who once served as a special government employee in the White House's Department of Government Efficiency (DOGE). He issued a brief warning on X: investors shouldn't get too comfortable or let their guard down.
On October 25, Musk replied to a post on X by Canadian venture capitalist Chamath Palihapitiya. Palihapitiya predicted that 2027 will be a turbulent year for companies providing infrastructure support for AI — and these companies are precisely the core pillar behind the strong performance of U.S. stocks. Palihapitiya said there will be a massive amount of idle computing power, a backlog of computing hardware inventory — in other words, large quantities of computing hardware sitting empty, not fully deployed for AI task operations. Musk replied in agreement: "Pretty much. I think a lot of compute will end up as idle assets in abandoned data centers."
At first glance, worrying about "idle computing power" seems odd, but Musk's warning essentially targets the core players across the AI infrastructure track. He specifically mentioned that more than 200 neoclouds will face "massive consolidation, mergers and acquisitions, with many small players exiting." Neoclouds refer to cloud computing providers built specifically to handle high-load AI tasks; most of these providers operate data centers with racks full of high-performance AI hardware. Musk believes many of these companies will go under: if an AI data center operator cannot generate stable, substantial revenue independent of AI business, its financing channels will quickly dry up. "A few companies will survive, but not many," he wrote.
In his original post, Musk pointed out that the bond market has already cut off financing access for virtually all companies that cannot generate large revenues independently of AI data centers. If events unfold as he predicts, the shock will ripple through the entire AI supply chain and even deal a heavy blow to the broader market, especially the S&P 500. In October, among the top listed companies in the U.S., just ten leaders with varying degrees of AI exposure accounted for roughly 40% of the index weight.
Trump himself is a strong advocate of AI. For example, in late September, he instructed all executive departments to stop using the term "artificial intelligence" and proposed replacing it with a new phrase: "Super intelligence." The market's underlying concern is this: if the handful of tech giants driving high growth lose momentum, they could drag the broader market into a correction or even trigger a crash. In fact, warning signals have already appeared: Alphabet (Google's parent company), Intel, and Amazon — these core AI companies — reported earnings that fell short of expectations, dragging U.S. stock indices lower. In October, Nasdaq 100 constituent stocks collectively shed nearly $2.6 trillion in market value.
The core question facing investors is this: should you continue holding along the AI theme? Or should you guard against the risk of a major correction in 2027? The answer depends largely on your age and how far you are from retirement. Here's why — along with several ways to hedge against a market downturn.
Sequence of Returns Risk
The stock market almost always recovers after a major crash, but not everyone can afford to wait — and that's the core risk known as sequence of returns risk. What it means: if a market correction or crash hits right as you're approaching retirement, your retirement account returns take a direct hit. If a bear market persists for several years and you're forced to withdraw money while your account is underwater, it permanently depletes your retirement principal over the long term.
This is why financial advisors often recommend that investors nearing or already in retirement hold some liquid assets: living off cash reserves without touching your positions while waiting for the market to recover can greatly help you avoid selling at the bottom. But cash doesn't have to sit idle — especially when high inflation erodes savings' purchasing power. A high-yield savings account (HYSA) is a solid choice. As of October 30, top high-yield savings account rates were significantly higher than regular deposits, reaching as high as 4.7%. Meanwhile, the latest data from the U.S. Bureau of Labor Statistics shows an inflation rate of 3.7% — meaning these deposits can match or even beat inflation. How much cash to ultimately hold depends on multiple factors including expenses, retirement income, and risk tolerance.
Allocating to Alternative Assets
If you're worried about stock market performance, you can allocate to other investment categories. The traditional approach is a 60/40 portfolio: 60% stocks and 40% bonds and other fixed-income assets. But if the market crashes, stocks and bonds could fall in tandem. For those nearing or already in retirement, this falls right into the sequence of returns risk trap.
This is where alternative assets with downside protection and value-preservation properties come into play — gold being the classic safe-haven asset. Gold doesn't depend on earnings growth or economic expansion like stocks do; whenever uncertainty rises — geopolitical conflicts, sharp currency fluctuations, growing inflation concerns — gold tends to attract capital inflows. One tax-advantaged way to invest in gold is through a Gold IRA: holding physical gold or gold-related assets within a retirement account while enjoying both IRA tax benefits and gold's safe-haven properties. It's suitable for investors who want to hedge macro uncertainty with retirement funds. Note: gold is better suited as a strategic allocation rather than a full replacement for your existing portfolio.
Of course, gold isn't the only protective tool.
Diversifying with Real Estate
Real estate is another popular alternative asset that can provide steady income. The logic is simple: people always need places to live and work. Rental properties can generate stable, predictable monthly cash flow and also serve as an inflation hedge — property prices and rents tend to rise alongside the cost of living. Multifamily housing is one direction in real estate investment, ranging from duplexes and triplexes all the way to large apartment buildings. A single asset can generate multiple streams of rental cash flow, providing stronger risk resilience.
If a recession does arrive, investors with capital looking to enter multifamily housing have an additional advantage. Al Brooks, vice chairman of commercial banking at JPMorgan Chase, said: "In my view, multifamily housing is exactly where investors should be allocating."
Staying Bullish on U.S. Assets
Of course, there's another option: ignore the noise and stay bullish on America. Corrections and even crashes can happen at any time, but that doesn't mean you should fear entering the market. If you have 30 years until retirement, even a major drop tomorrow would have limited impact on your long-term finances.
Historically, the stock market has been a powerful tool for wealth accumulation over the long term. For example, the S&P 500 has delivered an average annualized return of about 10% since its launch in 1957. ETFs (exchange-traded funds) are tools that combine diversification with risk reduction: a basket of stocks, bonds, and commodities packaged together and traded like individual stocks. ETFs can cover different sectors to achieve portfolio diversification, and the barrier to entry is relatively friendly.
If you don't want to research ETFs and build a portfolio yourself, you can also choose automatic dollar-cost averaging tools that invest your spare change automatically. For example: Acorns can link to your debit card or credit card, rounding up each purchase and automatically investing the difference into portfolios managed by experts from institutions like BlackRock and Vanguard. A $3.25 cup of coffee automatically sets aside $0.75 for future investing. You can then set up regular monthly contributions to boost your savings further.
Investment strategies can also be customized to your risk preferences, allocating to sectors like heavy industry, energy, consumer staples, and utilities. If you have concerns about AI, you can choose directions that align with your own thinking.
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