How to hedge the "AI bubble"? Bank of America proposes a new investment formula for the 2020s: B.I.G.

Bank of America says that Wall Street is embracing a new investment theme - BIG combination, which stands for Bonds, International stocks, and Gold. Strategist Michael Hartnett points out that using a long-term leverage strategy for BIG can help to deal with market volatility caused by the "artificial intelligence (AI) bubble". He specifically analyzes as follows: Bonds: With nominal GDP growth peaking, bonds are becoming a tool for hedging risk assets. The yield on US Treasury bonds is gradually declining - the yield on 5-year US bonds will approach 3% and the yield on 30-year US bonds will approach 4%. The end of the cyclical theme "ABB" (all but bonds can be invested) is favorable for bond-sensitive small-cap stocks; currently, the rolling return rate of small-cap stocks relative to large-cap stocks is -4%, nearing a century low. International assets: Will benefit from three factors - a weakening dollar, the end of deflation in the European Union and Japan, and the end of excessive fiscal expansion in the European Union and Asian economies. Among them, Chinese technology stocks are the optimal choice for hedging the US AI bubble with a "leveraging strategy". Gold: Can hedge against risks of government instability and dollar depreciation. Although the gold bull market has shifted from "quiet rise" to "strong rise", its price is expected to continue to climb.